Correlation Between Legg Mason and Templeton Global
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Templeton 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 Templeton 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 Templeton Global Bond, you can compare the effects of market volatilities on Legg Mason and Templeton 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 Templeton Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Templeton Global.
Diversification Opportunities for Legg Mason and Templeton Global
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Legg and Templeton is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Bw and Templeton Global Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Templeton 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 Templeton Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Templeton Global Bond has no effect on the direction of Legg Mason i.e., Legg Mason and Templeton Global go up and down completely randomly.
Pair Corralation between Legg Mason and Templeton Global
Assuming the 90 days horizon Legg Mason Bw is expected to under-perform the Templeton Global. In addition to that, Legg Mason is 1.3 times more volatile than Templeton Global Bond. It trades about -0.06 of its total potential returns per unit of risk. Templeton Global Bond is currently generating about -0.06 per unit of volatility. If you would invest 751.00 in Templeton Global Bond on January 17, 2024 and sell it today you would lose (50.00) from holding Templeton Global Bond or give up 6.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Legg Mason Bw vs. Templeton Global Bond
Performance |
| Timeline |
| Legg Mason Bw |
| Templeton Global Bond |
Legg Mason and Templeton Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Templeton Global
The main advantage of trading using opposite Legg Mason and Templeton Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Templeton 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 Templeton Global will offset losses from the drop in Templeton Global's long position.| Legg Mason vs. Clearbridge Aggressive Growth | Legg Mason vs. Clearbridge Small Cap | Legg Mason vs. Qs International Dividend | Legg Mason vs. Qs International Dividend |
| Templeton Global vs. Franklin Mutual Beacon | Templeton Global vs. Templeton Developing Markets | Templeton Global vs. Franklin Mutual Global | Templeton Global 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 Global Correlations module to find global opportunities by holding instruments from different markets.
Other Complementary Tools
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance |