Correlation Between Legg Mason and Pimco Unconstrained
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Pimco Unconstrained 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 Pimco Unconstrained 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 Pimco Unconstrained Bond, you can compare the effects of market volatilities on Legg Mason and Pimco Unconstrained 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 Pimco Unconstrained. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Pimco Unconstrained.
Diversification Opportunities for Legg Mason and Pimco Unconstrained
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Legg and Pimco is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Partners and Pimco Unconstrained Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Unconstrained 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 Pimco Unconstrained. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Unconstrained Bond has no effect on the direction of Legg Mason i.e., Legg Mason and Pimco Unconstrained go up and down completely randomly.
Pair Corralation between Legg Mason and Pimco Unconstrained
If you would invest 990.00 in Pimco Unconstrained Bond on August 28, 2024 and sell it today you would earn a total of 6.00 from holding Pimco Unconstrained Bond or generate 0.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Legg Mason Partners vs. Pimco Unconstrained Bond
Performance |
| Timeline |
| Legg Mason Partners |
| Pimco Unconstrained Bond |
Legg Mason and Pimco Unconstrained Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Pimco Unconstrained
The main advantage of trading using opposite Legg Mason and Pimco Unconstrained positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Pimco Unconstrained 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 Pimco Unconstrained will offset losses from the drop in Pimco Unconstrained'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 |
| Pimco Unconstrained vs. Us Government Plus | Pimco Unconstrained vs. Lord Abbett Government | Pimco Unconstrained vs. John Hancock Government | Pimco Unconstrained vs. Aig Government Money |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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