Correlation Between Legg Mason and Global Resources
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Global Resources 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 Global Resources 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 Global Resources Fund, you can compare the effects of market volatilities on Legg Mason and Global Resources 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 Global Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Global Resources.
Diversification Opportunities for Legg Mason and Global Resources
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Legg and Global is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Bw and Global Resources Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Resources 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 Global Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Resources has no effect on the direction of Legg Mason i.e., Legg Mason and Global Resources go up and down completely randomly.
Pair Corralation between Legg Mason and Global Resources
Assuming the 90 days horizon Legg Mason is expected to generate 2.34 times less return on investment than Global Resources. But when comparing it to its historical volatility, Legg Mason Bw is 1.41 times less risky than Global Resources. It trades about 0.18 of its potential returns per unit of risk. Global Resources Fund is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 423.00 in Global Resources Fund on June 12, 2025 and sell it today you would earn a total of 72.00 from holding Global Resources Fund or generate 17.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Legg Mason Bw vs. Global Resources Fund
Performance |
| Timeline |
| Legg Mason Bw |
| Global Resources |
Legg Mason and Global Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Global Resources
The main advantage of trading using opposite Legg Mason and Global Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Global Resources 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 Global Resources will offset losses from the drop in Global Resources' long position.| Legg Mason vs. Pace International Emerging | Legg Mason vs. Ashmore Emerging Markets | Legg Mason vs. Fidelity Series Emerging | Legg Mason vs. Shelton Emerging Markets |
| Global Resources vs. Balanced Fund Retail | Global Resources vs. Fkhemx | Global Resources vs. T Rowe Price | Global Resources vs. Ab Value Fund |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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