Correlation Between Legg Mason and Stet Tax
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Stet Tax 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 Stet Tax 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 Stet Tax Advantaged Income, you can compare the effects of market volatilities on Legg Mason and Stet Tax 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 Stet Tax. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Stet Tax.
Diversification Opportunities for Legg Mason and Stet Tax
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Legg and Stet is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Partners and Stet Tax Advantaged Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stet Tax Advantaged 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 Stet Tax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stet Tax Advantaged has no effect on the direction of Legg Mason i.e., Legg Mason and Stet Tax go up and down completely randomly.
Pair Corralation between Legg Mason and Stet Tax
Assuming the 90 days trading horizon Legg Mason Partners is expected to generate 2.61 times more return on investment than Stet Tax. However, Legg Mason is 2.61 times more volatile than Stet Tax Advantaged Income. It trades about 0.14 of its potential returns per unit of risk. Stet Tax Advantaged Income is currently generating about 0.21 per unit of risk. If you would invest 1,303 in Legg Mason Partners on September 12, 2024 and sell it today you would earn a total of 13.00 from holding Legg Mason Partners or generate 1.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Legg Mason Partners vs. Stet Tax Advantaged Income
Performance |
| Timeline |
| Legg Mason Partners |
| Stet Tax Advantaged |
Legg Mason and Stet Tax Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Stet Tax
The main advantage of trading using opposite Legg Mason and Stet Tax positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Stet Tax 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 Stet Tax will offset losses from the drop in Stet Tax's long position.| Legg Mason vs. Transamerica Intermediate Muni | Legg Mason vs. T Rowe Price | Legg Mason vs. T Rowe Price | Legg Mason vs. Bbh Intermediate Municipal |
| Stet Tax vs. Investec Emerging Markets | Stet Tax vs. Nasdaq 100 2x Strategy | Stet Tax vs. Mid Cap 15x Strategy | Stet Tax vs. Shelton Emerging Markets |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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