Correlation Between Legg Mason and Kinetics Global
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Kinetics Global 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 Global 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 Kinetics Global Fund, you can compare the effects of market volatilities on Legg Mason and Kinetics Global 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 Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Kinetics Global.
Diversification Opportunities for Legg Mason and Kinetics Global
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Legg and Kinetics is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Global and Kinetics Global Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinetics Global 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 Kinetics Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinetics Global has no effect on the direction of Legg Mason i.e., Legg Mason and Kinetics Global go up and down completely randomly.
Pair Corralation between Legg Mason and Kinetics Global
Assuming the 90 days horizon Legg Mason is expected to generate 2.74 times less return on investment than Kinetics Global. But when comparing it to its historical volatility, Legg Mason Global is 8.79 times less risky than Kinetics Global. It trades about 0.14 of its potential returns per unit of risk. Kinetics Global Fund is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,523 in Kinetics Global Fund on September 12, 2024 and sell it today you would earn a total of 21.00 from holding Kinetics Global Fund or generate 1.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Legg Mason Global vs. Kinetics Global Fund
Performance |
| Timeline |
| Legg Mason Global |
| Kinetics Global |
Legg Mason and Kinetics Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Kinetics Global
The main advantage of trading using opposite Legg Mason and Kinetics Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Kinetics Global 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 Global will offset losses from the drop in Kinetics Global's long position.| Legg Mason vs. Ab Global Real | Legg Mason vs. Kinetics Global Fund | Legg Mason vs. Mirova Global Green | Legg Mason vs. Scharf Global Opportunity |
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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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