Correlation Between Legg Mason and Gmo Emerging
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Gmo 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 Gmo 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 Gmo Emerging Markets, you can compare the effects of market volatilities on Legg Mason and Gmo 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 Gmo Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Gmo Emerging.
Diversification Opportunities for Legg Mason and Gmo Emerging
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Legg and Gmo is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Partners and Gmo Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gmo Emerging Markets 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 Gmo Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gmo Emerging Markets has no effect on the direction of Legg Mason i.e., Legg Mason and Gmo Emerging go up and down completely randomly.
Pair Corralation between Legg Mason and Gmo Emerging
Assuming the 90 days trading horizon Legg Mason Partners is expected to generate 2.13 times more return on investment than Gmo Emerging. However, Legg Mason is 2.13 times more volatile than Gmo Emerging Markets. It trades about 0.36 of its potential returns per unit of risk. Gmo Emerging Markets is currently generating about -0.1 per unit of risk. If you would invest 2,570 in Legg Mason Partners on September 1, 2024 and sell it today you would earn a total of 313.00 from holding Legg Mason Partners or generate 12.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Legg Mason Partners vs. Gmo Emerging Markets
Performance |
| Timeline |
| Legg Mason Partners |
| Gmo Emerging Markets |
Legg Mason and Gmo Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Gmo Emerging
The main advantage of trading using opposite Legg Mason and Gmo Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Gmo 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 Gmo Emerging will offset losses from the drop in Gmo Emerging's long position.| Legg Mason vs. Transamerica Emerging Markets | Legg Mason vs. Angel Oak Multi Strategy | Legg Mason vs. Shelton Emerging Markets | Legg Mason vs. Eagle Mlp Strategy |
| Gmo Emerging vs. Vanguard Growth And | Gmo Emerging vs. Kinetics Small Cap | Gmo Emerging vs. L Abbett Growth | Gmo Emerging vs. Legg Mason Partners |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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