Correlation Between Legg Mason and California Bond
Can any of the company-specific risk be diversified away by investing in both Legg Mason and California Bond 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 California Bond 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 California Bond Fund, you can compare the effects of market volatilities on Legg Mason and California Bond 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 California Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and California Bond.
Diversification Opportunities for Legg Mason and California Bond
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Legg and California is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Partners and California Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on California 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 California Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of California Bond has no effect on the direction of Legg Mason i.e., Legg Mason and California Bond go up and down completely randomly.
Pair Corralation between Legg Mason and California Bond
If you would invest 1,039 in California Bond Fund on September 12, 2024 and sell it today you would earn a total of 13.00 from holding California Bond Fund or generate 1.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Legg Mason Partners vs. California Bond Fund
Performance |
| Timeline |
| Legg Mason Partners |
| California Bond |
Legg Mason and California Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and California Bond
The main advantage of trading using opposite Legg Mason and California Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, California Bond 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 California Bond will offset losses from the drop in California Bond's long position.| Legg Mason vs. Dreyfus Natural Resources | Legg Mason vs. Goehring Rozencwajg Resources | Legg Mason vs. Thrivent Natural Resources | Legg Mason vs. Tortoise Energy Independence |
| California Bond vs. Vanguard California Long Term | California Bond vs. Vanguard California Long Term | California Bond vs. SCOR PK | California Bond vs. Morningstar Unconstrained Allocation |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
Other Complementary Tools
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk |