Correlation Between Legg Mason and Kngt Clb
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Kngt Clb 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 Kngt Clb into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Legg Mason Global and Kngt Clb Sml, you can compare the effects of market volatilities on Legg Mason and Kngt Clb 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 Kngt Clb. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Kngt Clb.
Diversification Opportunities for Legg Mason and Kngt Clb
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Legg and Kngt is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Global and Kngt Clb Sml in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kngt Clb Sml 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 Global are associated (or correlated) with Kngt Clb. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kngt Clb Sml has no effect on the direction of Legg Mason i.e., Legg Mason and Kngt Clb go up and down completely randomly.
Pair Corralation between Legg Mason and Kngt Clb
Assuming the 90 days horizon Legg Mason is expected to generate 2.81 times less return on investment than Kngt Clb. But when comparing it to its historical volatility, Legg Mason Global is 4.7 times less risky than Kngt Clb. It trades about 0.28 of its potential returns per unit of risk. Kngt Clb Sml is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 1,320 in Kngt Clb Sml on November 3, 2024 and sell it today you would earn a total of 44.00 from holding Kngt Clb Sml or generate 3.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Legg Mason Global vs. Kngt Clb Sml
Performance |
| Timeline |
| Legg Mason Global |
| Kngt Clb Sml |
Legg Mason and Kngt Clb Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Kngt Clb
The main advantage of trading using opposite Legg Mason and Kngt Clb positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Kngt Clb 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 Kngt Clb will offset losses from the drop in Kngt Clb's long position.| Legg Mason vs. Lord Abbett Diversified | Legg Mason vs. Lord Abbett Diversified | Legg Mason vs. Fulcrum Diversified Absolute | Legg Mason vs. Wells Fargo Diversified |
| Kngt Clb vs. Blackrock Global Longshort | Kngt Clb vs. Virtus Multi Sector Short | Kngt Clb vs. Nuveen Short Term | Kngt Clb vs. Ultra Short Fixed Income |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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