Correlation Between Legg Mason and Templeton Emerging
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Templeton Emerging 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 Templeton Emerging 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 Templeton Emerging Markets, you can compare the effects of market volatilities on Legg Mason and Templeton Emerging 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 Templeton Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Templeton Emerging.
Diversification Opportunities for Legg Mason and Templeton Emerging
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Legg and Templeton is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Partners and Templeton Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Templeton Emerging 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 Templeton Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Templeton Emerging has no effect on the direction of Legg Mason i.e., Legg Mason and Templeton Emerging go up and down completely randomly.
Pair Corralation between Legg Mason and Templeton Emerging
Assuming the 90 days trading horizon Legg Mason Partners is expected to generate 0.96 times more return on investment than Templeton Emerging. However, Legg Mason Partners is 1.04 times less risky than Templeton Emerging. It trades about 0.17 of its potential returns per unit of risk. Templeton Emerging Markets is currently generating about 0.02 per unit of risk. If you would invest 2,124 in Legg Mason Partners on September 3, 2024 and sell it today you would earn a total of 343.00 from holding Legg Mason Partners or generate 16.15% 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. Templeton Emerging Markets
Performance |
| Timeline |
| Legg Mason Partners |
| Templeton Emerging |
Legg Mason and Templeton Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Templeton Emerging
The main advantage of trading using opposite Legg Mason and Templeton Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Templeton Emerging 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 Templeton Emerging will offset losses from the drop in Templeton Emerging's long position.| Legg Mason vs. Vanguard Total Stock | Legg Mason vs. Vanguard 500 Index | Legg Mason vs. Vanguard Total Stock | Legg Mason vs. Vanguard Total Stock |
| Templeton Emerging vs. Franklin Mutual Global | Templeton Emerging vs. Templeton Growth Fund | Templeton Emerging vs. Franklin Real Estate | Templeton Emerging vs. HUMANA INC |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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