Correlation Between Transamerica International and Legg Mason
Can any of the company-specific risk be diversified away by investing in both Transamerica International 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 Transamerica International and Legg Mason into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Transamerica International Growth and Legg Mason Global, you can compare the effects of market volatilities on Transamerica International 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 Transamerica International with a short position of Legg Mason. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transamerica International and Legg Mason.
Diversification Opportunities for Transamerica International and Legg Mason
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Transamerica and Legg is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Transamerica International Gro and Legg Mason Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Legg Mason Global and Transamerica International 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 Transamerica International Growth 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 Global has no effect on the direction of Transamerica International i.e., Transamerica International and Legg Mason go up and down completely randomly.
Pair Corralation between Transamerica International and Legg Mason
Assuming the 90 days horizon Transamerica International Growth is expected to under-perform the Legg Mason. In addition to that, Transamerica International is 3.06 times more volatile than Legg Mason Global. It trades about -0.01 of its total potential returns per unit of risk. Legg Mason Global is currently generating about 0.05 per unit of volatility. If you would invest 847.00 in Legg Mason Global on November 1, 2024 and sell it today you would earn a total of 78.00 from holding Legg Mason Global or generate 9.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
Transamerica International Gro vs. Legg Mason Global
Performance |
| Timeline |
| Transamerica International |
| Legg Mason Global |
Transamerica International and Legg Mason Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transamerica International and Legg Mason
The main advantage of trading using opposite Transamerica International and Legg Mason positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transamerica International 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.| Transamerica International vs. Dws Global Macro | Transamerica International vs. Legg Mason Global | Transamerica International vs. Investec Global Franchise | Transamerica International vs. Rbc Global Equity |
| Legg Mason vs. Tekla Healthcare Investors | Legg Mason vs. Baron Health Care | Legg Mason vs. The Hartford Healthcare | Legg Mason vs. Health Care Fund |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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