Correlation Between Templeton World and Legg Mason
Can any of the company-specific risk be diversified away by investing in both Templeton World and Legg Mason 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 Templeton World and Legg Mason into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Templeton World Fund and Legg Mason Bw, you can compare the effects of market volatilities on Templeton World and Legg Mason 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 Templeton World with a short position of Legg Mason. Check out your portfolio center. Please also check ongoing floating volatility patterns of Templeton World and Legg Mason.
Diversification Opportunities for Templeton World and Legg Mason
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Templeton and LEGG is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Templeton World Fund and Legg Mason Bw in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Legg Mason Bw and Templeton World 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 Templeton World Fund are associated (or correlated) with Legg Mason. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Legg Mason Bw has no effect on the direction of Templeton World i.e., Templeton World and Legg Mason go up and down completely randomly.
Pair Corralation between Templeton World and Legg Mason
Assuming the 90 days horizon Templeton World Fund is expected to generate 1.86 times more return on investment than Legg Mason. However, Templeton World is 1.86 times more volatile than Legg Mason Bw. It trades about 0.07 of its potential returns per unit of risk. Legg Mason Bw is currently generating about 0.02 per unit of risk. If you would invest 1,286 in Templeton World Fund on November 28, 2024 and sell it today you would earn a total of 427.00 from holding Templeton World Fund or generate 33.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Templeton World Fund vs. Legg Mason Bw
Performance |
| Timeline |
| Templeton World |
| Legg Mason Bw |
Templeton World and Legg Mason Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Templeton World and Legg Mason
The main advantage of trading using opposite Templeton World and Legg Mason positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Templeton World position performs unexpectedly, Legg Mason 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 Legg Mason will offset losses from the drop in Legg Mason's long position.| Templeton World vs. Tiaa Cref Large Cap Growth | Templeton World vs. Dodge Cox Stock | Templeton World vs. Blackrock Large Cap | Templeton World vs. Wasatch Large Cap |
| Legg Mason vs. Great West Moderately Servative | Legg Mason vs. Wealthbuilder Moderate Balanced | Legg Mason vs. Dimensional Retirement Income | Legg Mason vs. Franklin Lifesmart Retirement |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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