Correlation Between Pimco Diversified and Legg Mason
Can any of the company-specific risk be diversified away by investing in both Pimco Diversified 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 Pimco Diversified and Legg Mason into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pimco Diversified Income and Legg Mason Global, you can compare the effects of market volatilities on Pimco Diversified 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 Pimco Diversified with a short position of Legg Mason. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Diversified and Legg Mason.
Diversification Opportunities for Pimco Diversified and Legg Mason
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Pimco and Legg is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Diversified Income and Legg Mason Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Legg Mason Global and Pimco Diversified 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 Pimco Diversified Income 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 Global has no effect on the direction of Pimco Diversified i.e., Pimco Diversified and Legg Mason go up and down completely randomly.
Pair Corralation between Pimco Diversified and Legg Mason
Assuming the 90 days horizon Pimco Diversified Income is expected to generate 1.02 times more return on investment than Legg Mason. However, Pimco Diversified is 1.02 times more volatile than Legg Mason Global. It trades about 0.33 of its potential returns per unit of risk. Legg Mason Global is currently generating about 0.28 per unit of risk. If you would invest 966.00 in Pimco Diversified Income on December 5, 2024 and sell it today you would earn a total of 15.00 from holding Pimco Diversified Income or generate 1.55% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Pimco Diversified Income vs. Legg Mason Global
Performance |
Timeline |
Pimco Diversified Income |
Legg Mason Global |
Pimco Diversified and Legg Mason Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Pimco Diversified and Legg Mason
The main advantage of trading using opposite Pimco Diversified and Legg Mason positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco Diversified 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.Pimco Diversified vs. Federated Government Income | Pimco Diversified vs. Virtus Seix Government | Pimco Diversified vs. Government Securities Fund | Pimco Diversified vs. Us Government Securities |
Legg Mason vs. Shelton Emerging Markets | Legg Mason vs. Metropolitan West Ultra | Legg Mason vs. Angel Oak Ultrashort | Legg Mason vs. Doubleline Emerging Markets |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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