Correlation Between Nuveen Arizona and Legg Mason
Can any of the company-specific risk be diversified away by investing in both Nuveen Arizona 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 Nuveen Arizona and Legg Mason into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nuveen Arizona Municipal and Legg Mason Partners, you can compare the effects of market volatilities on Nuveen Arizona 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 Nuveen Arizona with a short position of Legg Mason. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nuveen Arizona and Legg Mason.
Diversification Opportunities for Nuveen Arizona and Legg Mason
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between NUVEEN and Legg is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen Arizona Municipal and Legg Mason Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Legg Mason Partners and Nuveen Arizona 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 Nuveen Arizona Municipal 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 Partners has no effect on the direction of Nuveen Arizona i.e., Nuveen Arizona and Legg Mason go up and down completely randomly.
Pair Corralation between Nuveen Arizona and Legg Mason
Assuming the 90 days horizon Nuveen Arizona is expected to generate 3.54 times less return on investment than Legg Mason. But when comparing it to its historical volatility, Nuveen Arizona Municipal is 2.52 times less risky than Legg Mason. It trades about 0.07 of its potential returns per unit of risk. Legg Mason Partners is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,088 in Legg Mason Partners on September 2, 2024 and sell it today you would earn a total of 361.00 from holding Legg Mason Partners or generate 33.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nuveen Arizona Municipal vs. Legg Mason Partners
Performance |
| Timeline |
| Nuveen Arizona Municipal |
| Legg Mason Partners |
Nuveen Arizona and Legg Mason Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nuveen Arizona and Legg Mason
The main advantage of trading using opposite Nuveen Arizona and Legg Mason positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nuveen Arizona 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.| Nuveen Arizona vs. Strategic Allocation Moderate | Nuveen Arizona vs. Saat Moderate Strategy | Nuveen Arizona vs. Tiaa Cref Lifestyle Moderate | Nuveen Arizona vs. Qs Moderate Growth |
| Legg Mason vs. Vanguard Total Stock | Legg Mason vs. Vanguard 500 Index | Legg Mason vs. Vanguard Total Stock | Legg Mason vs. Vanguard Total Stock |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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