Correlation Between Us Global and Legg Mason
Can any of the company-specific risk be diversified away by investing in both Us Global 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 Us Global and Legg Mason into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Us Global Leaders and Legg Mason Bw, you can compare the effects of market volatilities on Us Global 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 Us Global with a short position of Legg Mason. Check out your portfolio center. Please also check ongoing floating volatility patterns of Us Global and Legg Mason.
Diversification Opportunities for Us Global and Legg Mason
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between USLIX and Legg is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Us Global Leaders 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 Us Global 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 Us Global Leaders 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 Us Global i.e., Us Global and Legg Mason go up and down completely randomly.
Pair Corralation between Us Global and Legg Mason
Assuming the 90 days horizon Us Global Leaders is expected to generate 2.73 times more return on investment than Legg Mason. However, Us Global is 2.73 times more volatile than Legg Mason Bw. It trades about 0.18 of its potential returns per unit of risk. Legg Mason Bw is currently generating about -0.03 per unit of risk. If you would invest 8,204 in Us Global Leaders on August 26, 2024 and sell it today you would earn a total of 304.00 from holding Us Global Leaders or generate 3.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Us Global Leaders vs. Legg Mason Bw
Performance |
| Timeline |
| Us Global Leaders |
| Legg Mason Bw |
Us Global and Legg Mason Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Us Global and Legg Mason
The main advantage of trading using opposite Us Global and Legg Mason positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Us Global 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.| Us Global vs. Regional Bank Fund | Us Global vs. Regional Bank Fund | Us Global vs. Multimanager Lifestyle Moderate | Us Global vs. Multimanager Lifestyle Balanced |
| Legg Mason vs. Franklin Mutual Beacon | Legg Mason vs. Templeton Developing Markets | Legg Mason vs. Franklin Mutual Global | Legg Mason vs. Franklin Mutual Global |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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