Correlation Between Legg Mason and Kopernik Global
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Kopernik 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 Kopernik Global 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 Kopernik Global All Cap, you can compare the effects of market volatilities on Legg Mason and Kopernik 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 Kopernik Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Kopernik Global.
Diversification Opportunities for Legg Mason and Kopernik Global
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Legg and Kopernik is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Partners and Kopernik Global All Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kopernik Global All 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 Kopernik Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kopernik Global All has no effect on the direction of Legg Mason i.e., Legg Mason and Kopernik Global go up and down completely randomly.
Pair Corralation between Legg Mason and Kopernik Global
Assuming the 90 days trading horizon Legg Mason Partners is expected to under-perform the Kopernik Global. But the fund apears to be less risky and, when comparing its historical volatility, Legg Mason Partners is 1.38 times less risky than Kopernik Global. The fund trades about -0.07 of its potential returns per unit of risk. The Kopernik Global All Cap is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 1,138 in Kopernik Global All Cap on November 28, 2024 and sell it today you would earn a total of 48.00 from holding Kopernik Global All Cap or generate 4.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Legg Mason Partners vs. Kopernik Global All Cap
Performance |
| Timeline |
| Legg Mason Partners |
| Kopernik Global All |
Legg Mason and Kopernik Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Kopernik Global
The main advantage of trading using opposite Legg Mason and Kopernik Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Kopernik 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 Kopernik Global will offset losses from the drop in Kopernik Global's long position.| Legg Mason vs. T Rowe Price | Legg Mason vs. Dreyfusstandish Global Fixed | Legg Mason vs. Crossmark Steward Equity | Legg Mason vs. Dodge International Stock |
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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