Correlation Between Federated Kaufmann and Legg Mason
Can any of the company-specific risk be diversified away by investing in both Federated Kaufmann 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 Federated Kaufmann and Legg Mason into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Kaufmann Large and Legg Mason Bw, you can compare the effects of market volatilities on Federated Kaufmann 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 Federated Kaufmann with a short position of Legg Mason. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Kaufmann and Legg Mason.
Diversification Opportunities for Federated Kaufmann and Legg Mason
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Federated and Legg is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Federated Kaufmann Large and Legg Mason Bw in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Legg Mason Bw and Federated Kaufmann 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 Federated Kaufmann Large 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 Bw has no effect on the direction of Federated Kaufmann i.e., Federated Kaufmann and Legg Mason go up and down completely randomly.
Pair Corralation between Federated Kaufmann and Legg Mason
Assuming the 90 days horizon Federated Kaufmann Large is expected to generate 0.88 times more return on investment than Legg Mason. However, Federated Kaufmann Large is 1.13 times less risky than Legg Mason. It trades about 0.36 of its potential returns per unit of risk. Legg Mason Bw is currently generating about 0.3 per unit of risk. If you would invest 1,877 in Federated Kaufmann Large on September 4, 2024 and sell it today you would earn a total of 130.00 from holding Federated Kaufmann Large or generate 6.93% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Federated Kaufmann Large vs. Legg Mason Bw
Performance |
Timeline |
Federated Kaufmann Large |
Legg Mason Bw |
Federated Kaufmann and Legg Mason Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Federated Kaufmann and Legg Mason
The main advantage of trading using opposite Federated Kaufmann and Legg Mason positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Kaufmann 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.Federated Kaufmann vs. Gamco Natural Resources | Federated Kaufmann vs. Firsthand Alternative Energy | Federated Kaufmann vs. Clearbridge Energy Mlp | Federated Kaufmann vs. Salient Mlp Energy |
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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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