Correlation Between Legg Mason and Kentucky Tax-free
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Kentucky Tax-free 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 Kentucky Tax-free 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 Kentucky Tax Free Income, you can compare the effects of market volatilities on Legg Mason and Kentucky Tax-free 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 Kentucky Tax-free. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Kentucky Tax-free.
Diversification Opportunities for Legg Mason and Kentucky Tax-free
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Legg and Kentucky is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Bw and Kentucky Tax Free Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kentucky Tax Free 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 Kentucky Tax-free. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kentucky Tax Free has no effect on the direction of Legg Mason i.e., Legg Mason and Kentucky Tax-free go up and down completely randomly.
Pair Corralation between Legg Mason and Kentucky Tax-free
Assuming the 90 days horizon Legg Mason Bw is expected to generate 3.73 times more return on investment than Kentucky Tax-free. However, Legg Mason is 3.73 times more volatile than Kentucky Tax Free Income. It trades about 0.16 of its potential returns per unit of risk. Kentucky Tax Free Income is currently generating about 0.07 per unit of risk. If you would invest 1,787 in Legg Mason Bw on September 3, 2024 and sell it today you would earn a total of 587.00 from holding Legg Mason Bw or generate 32.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Legg Mason Bw vs. Kentucky Tax Free Income
Performance |
| Timeline |
| Legg Mason Bw |
| Kentucky Tax Free |
Legg Mason and Kentucky Tax-free Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Kentucky Tax-free
The main advantage of trading using opposite Legg Mason and Kentucky Tax-free positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Kentucky Tax-free 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 Kentucky Tax-free will offset losses from the drop in Kentucky Tax-free's long position.| Legg Mason vs. Dodge Cox Stock | Legg Mason vs. American Funds American | Legg Mason vs. American Funds American | Legg Mason vs. American Mutual Fund |
| Kentucky Tax-free vs. The Gabelli Small | Kentucky Tax-free vs. Legg Mason Bw | Kentucky Tax-free vs. T Rowe Price | Kentucky Tax-free vs. Northern Small Cap |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
Other Complementary Tools
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences |