Correlation Between Legg Mason and International Bond
Can any of the company-specific risk be diversified away by investing in both Legg Mason and International 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 International Bond into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Legg Mason Bw and International Bond Fund, you can compare the effects of market volatilities on Legg Mason and International 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 International Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and International Bond.
Diversification Opportunities for Legg Mason and International Bond
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Legg and International is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Bw and International Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International 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 Bw are associated (or correlated) with International Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Bond has no effect on the direction of Legg Mason i.e., Legg Mason and International Bond go up and down completely randomly.
Pair Corralation between Legg Mason and International Bond
If you would invest 1,066 in International Bond Fund on January 26, 2024 and sell it today you would earn a total of 0.00 from holding International Bond Fund or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 4.76% |
| Values | Daily Returns |
Legg Mason Bw vs. International Bond Fund
Performance |
| Timeline |
| Legg Mason Bw |
| International Bond |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Strong
Legg Mason and International Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and International Bond
The main advantage of trading using opposite Legg Mason and International Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, International 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 International Bond will offset losses from the drop in International Bond's long position.| Legg Mason vs. Elfun Government Money | Legg Mason vs. Matson Money Equity | Legg Mason vs. Goldman Sachs Trust | Legg Mason vs. Franklin Government Money |
| International Bond vs. Deutsche Real Estate | International Bond vs. Janus Global Real | International Bond vs. Global Real Estate | International Bond vs. Short Real Estate |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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