Correlation Between Western Asset and Legg Mason
Can any of the company-specific risk be diversified away by investing in both Western Asset 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 Western Asset and Legg Mason into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Inflation and Legg Mason Bw, you can compare the effects of market volatilities on Western Asset 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 Western Asset with a short position of Legg Mason. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Legg Mason.
Diversification Opportunities for Western Asset and Legg Mason
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Western and Legg is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Inflation 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 Western Asset 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 Western Asset Inflation 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 Western Asset i.e., Western Asset and Legg Mason go up and down completely randomly.
Pair Corralation between Western Asset and Legg Mason
Assuming the 90 days horizon Western Asset is expected to generate 8.02 times less return on investment than Legg Mason. But when comparing it to its historical volatility, Western Asset Inflation is 1.82 times less risky than Legg Mason. It trades about 0.03 of its potential returns per unit of risk. Legg Mason Bw is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,712 in Legg Mason Bw on August 31, 2024 and sell it today you would earn a total of 630.00 from holding Legg Mason Bw or generate 36.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Inflation vs. Legg Mason Bw
Performance |
| Timeline |
| Western Asset Inflation |
| Legg Mason Bw |
Western Asset and Legg Mason Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Legg Mason
The main advantage of trading using opposite Western Asset and Legg Mason positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset 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.| Western Asset vs. Us Government Plus | Western Asset vs. Fidelity Series Government | Western Asset vs. John Hancock Government | Western Asset vs. Goldman Sachs Government |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
Other Complementary Tools
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Stocks Directory Find actively traded stocks across global markets | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets |