Correlation Between Versatile Bond and Legg Mason
Can any of the company-specific risk be diversified away by investing in both Versatile Bond and Legg Mason at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Versatile Bond and Legg Mason into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Versatile Bond Portfolio and Legg Mason Bw, you can compare the effects of market volatilities on Versatile Bond and Legg Mason and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Versatile Bond with a short position of Legg Mason. Check out your portfolio center. Please also check ongoing floating volatility patterns of Versatile Bond and Legg Mason.
Diversification Opportunities for Versatile Bond and Legg Mason
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Versatile and Legg is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Versatile Bond Portfolio and Legg Mason Bw in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Legg Mason Bw and Versatile Bond is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Versatile Bond Portfolio are associated (or correlated) with Legg Mason. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Legg Mason Bw has no effect on the direction of Versatile Bond i.e., Versatile Bond and Legg Mason go up and down completely randomly.
Pair Corralation between Versatile Bond and Legg Mason
Assuming the 90 days horizon Versatile Bond is expected to generate 10.84 times less return on investment than Legg Mason. But when comparing it to its historical volatility, Versatile Bond Portfolio is 4.99 times less risky than Legg Mason. It trades about 0.15 of its potential returns per unit of risk. Legg Mason Bw is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 1,976 in Legg Mason Bw on October 20, 2024 and sell it today you would earn a total of 102.00 from holding Legg Mason Bw or generate 5.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Versatile Bond Portfolio vs. Legg Mason Bw
Performance |
| Timeline |
| Versatile Bond Portfolio |
| Legg Mason Bw |
Versatile Bond and Legg Mason Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Versatile Bond and Legg Mason
The main advantage of trading using opposite Versatile Bond and Legg Mason positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Versatile Bond position performs unexpectedly, Legg Mason can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Legg Mason will offset losses from the drop in Legg Mason's long position.| Versatile Bond vs. Short Term Treasury Portfolio | Versatile Bond vs. Aggressive Growth Portfolio | Versatile Bond vs. Permanent Portfolio Class | Versatile Bond vs. Thompson Bond Fund |
| Legg Mason vs. Smallcap Fund Fka | Legg Mason vs. Rbc Small Cap | Legg Mason vs. Kinetics Small Cap | Legg Mason vs. Df Dent Small |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
Other Complementary Tools
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio |