Correlation Between Oklahoma Municipal and Legg Mason
Can any of the company-specific risk be diversified away by investing in both Oklahoma Municipal 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 Oklahoma Municipal and Legg Mason into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oklahoma Municipal Fund and Legg Mason Partners, you can compare the effects of market volatilities on Oklahoma Municipal 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 Oklahoma Municipal with a short position of Legg Mason. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oklahoma Municipal and Legg Mason.
Diversification Opportunities for Oklahoma Municipal and Legg Mason
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Oklahoma and Legg is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Oklahoma Municipal Fund and Legg Mason Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Legg Mason Partners and Oklahoma Municipal 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 Oklahoma Municipal Fund 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 Partners has no effect on the direction of Oklahoma Municipal i.e., Oklahoma Municipal and Legg Mason go up and down completely randomly.
Pair Corralation between Oklahoma Municipal and Legg Mason
Assuming the 90 days horizon Oklahoma Municipal Fund is expected to generate 1.86 times more return on investment than Legg Mason. However, Oklahoma Municipal is 1.86 times more volatile than Legg Mason Partners. It trades about 0.22 of its potential returns per unit of risk. Legg Mason Partners is currently generating about 0.31 per unit of risk. If you would invest 1,049 in Oklahoma Municipal Fund on September 2, 2024 and sell it today you would earn a total of 17.00 from holding Oklahoma Municipal Fund or generate 1.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Oklahoma Municipal Fund vs. Legg Mason Partners
Performance |
| Timeline |
| Oklahoma Municipal |
| Legg Mason Partners |
Oklahoma Municipal and Legg Mason Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oklahoma Municipal and Legg Mason
The main advantage of trading using opposite Oklahoma Municipal and Legg Mason positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oklahoma Municipal 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.| Oklahoma Municipal vs. Royce Global Financial | Oklahoma Municipal vs. Prudential Jennison Financial | Oklahoma Municipal vs. Angel Oak Financial | Oklahoma Municipal vs. Mesirow Financial Small |
| Legg Mason vs. Vanguard Total Stock | Legg Mason vs. Vanguard 500 Index | Legg Mason vs. Vanguard Total Stock | Legg Mason vs. Vanguard Total Stock |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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