Correlation Between Legg Mason and Blackrock Government
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Blackrock Government 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 Legg Mason and Blackrock Government into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Legg Mason Partners and Blackrock Government Bond, you can compare the effects of market volatilities on Legg Mason and Blackrock Government 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 Legg Mason with a short position of Blackrock Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Blackrock Government.
Diversification Opportunities for Legg Mason and Blackrock Government
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Legg and Blackrock is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Partners and Blackrock Government Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Government Bond and Legg Mason 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 Legg Mason Partners are associated (or correlated) with Blackrock Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Government Bond has no effect on the direction of Legg Mason i.e., Legg Mason and Blackrock Government go up and down completely randomly.
Pair Corralation between Legg Mason and Blackrock Government
Assuming the 90 days trading horizon Legg Mason Partners is expected to generate 1.07 times more return on investment than Blackrock Government. However, Legg Mason is 1.07 times more volatile than Blackrock Government Bond. It trades about 0.38 of its potential returns per unit of risk. Blackrock Government Bond is currently generating about 0.13 per unit of risk. If you would invest 1,270 in Legg Mason Partners on September 3, 2024 and sell it today you would earn a total of 41.00 from holding Legg Mason Partners or generate 3.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Legg Mason Partners vs. Blackrock Government Bond
Performance |
| Timeline |
| Legg Mason Partners |
| Blackrock Government Bond |
Legg Mason and Blackrock Government Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Blackrock Government
The main advantage of trading using opposite Legg Mason and Blackrock Government positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Blackrock Government 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 Blackrock Government will offset losses from the drop in Blackrock Government's long position.| Legg Mason vs. Blackrock Government Bond | Legg Mason vs. Inverse Government Long | Legg Mason vs. Dws Government Money | Legg Mason vs. Us Government Securities |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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