Correlation Between Legg Mason and Kinetics Market
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Kinetics Market 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 Kinetics Market into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Legg Mason Partners and Kinetics Market Opportunities, you can compare the effects of market volatilities on Legg Mason and Kinetics Market 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 Kinetics Market. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Kinetics Market.
Diversification Opportunities for Legg Mason and Kinetics Market
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Legg and Kinetics is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Partners and Kinetics Market Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinetics Market Oppo 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 Partners are associated (or correlated) with Kinetics Market. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinetics Market Oppo has no effect on the direction of Legg Mason i.e., Legg Mason and Kinetics Market go up and down completely randomly.
Pair Corralation between Legg Mason and Kinetics Market
Assuming the 90 days horizon Legg Mason Partners is expected to generate 13.68 times more return on investment than Kinetics Market. However, Legg Mason is 13.68 times more volatile than Kinetics Market Opportunities. It trades about 0.04 of its potential returns per unit of risk. Kinetics Market Opportunities is currently generating about 0.17 per unit of risk. If you would invest 93.00 in Legg Mason Partners on September 4, 2024 and sell it today you would earn a total of 7.00 from holding Legg Mason Partners or generate 7.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.73% |
| Values | Daily Returns |
Legg Mason Partners vs. Kinetics Market Opportunities
Performance |
| Timeline |
| Legg Mason Partners |
| Kinetics Market Oppo |
Legg Mason and Kinetics Market Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Kinetics Market
The main advantage of trading using opposite Legg Mason and Kinetics Market positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Kinetics Market 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 Kinetics Market will offset losses from the drop in Kinetics Market's long position.| Legg Mason vs. Vanguard Total Stock | Legg Mason vs. Vanguard 500 Index | Legg Mason vs. Vanguard Total Stock | Legg Mason vs. Vanguard Total Stock |
| Kinetics Market vs. Kinetics Global Fund | Kinetics Market vs. Kinetics Global Fund | Kinetics Market vs. Kinetics Paradigm Fund | Kinetics Market vs. Kinetics Internet 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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