Correlation Between Legg Mason and Mfs Global
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Mfs Global 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 Mfs Global 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 Mfs Global Bond, you can compare the effects of market volatilities on Legg Mason and Mfs Global 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 Mfs Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Mfs Global.
Diversification Opportunities for Legg Mason and Mfs Global
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Legg and Mfs is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Bw and Mfs Global Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs Global 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 Mfs Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mfs Global Bond has no effect on the direction of Legg Mason i.e., Legg Mason and Mfs Global go up and down completely randomly.
Pair Corralation between Legg Mason and Mfs Global
Assuming the 90 days horizon Legg Mason Bw is expected to under-perform the Mfs Global. In addition to that, Legg Mason is 2.04 times more volatile than Mfs Global Bond. It trades about -0.25 of its total potential returns per unit of risk. Mfs Global Bond is currently generating about -0.13 per unit of volatility. If you would invest 805.00 in Mfs Global Bond on January 19, 2024 and sell it today you would lose (8.00) from holding Mfs Global Bond or give up 0.99% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Legg Mason Bw vs. Mfs Global Bond
Performance |
| Timeline |
| Legg Mason Bw |
| Mfs Global Bond |
Legg Mason and Mfs Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Mfs Global
The main advantage of trading using opposite Legg Mason and Mfs Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Mfs Global 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 Mfs Global will offset losses from the drop in Mfs Global's long position.| Legg Mason vs. Templeton Global Bond | Legg Mason vs. Capital World Bond | Legg Mason vs. Capital World Bond | Legg Mason vs. Capital World Bond |
| Mfs Global vs. Mfs Prudent Investor | Mfs Global vs. Mfs Prudent Investor | Mfs Global vs. Mfs Prudent Investor | Mfs Global vs. Mfs Prudent Investor |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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