Correlation Between Legg Mason and Tax-exempt High
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Tax-exempt High 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 Tax-exempt High 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 Tax Exempt High Yield, you can compare the effects of market volatilities on Legg Mason and Tax-exempt High 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 Tax-exempt High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Tax-exempt High.
Diversification Opportunities for Legg Mason and Tax-exempt High
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Legg and Tax-exempt is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Partners and Tax Exempt High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tax Exempt High 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 Tax-exempt High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tax Exempt High has no effect on the direction of Legg Mason i.e., Legg Mason and Tax-exempt High go up and down completely randomly.
Pair Corralation between Legg Mason and Tax-exempt High
If you would invest 992.00 in Tax Exempt High Yield on August 29, 2024 and sell it today you would earn a total of 15.00 from holding Tax Exempt High Yield or generate 1.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Legg Mason Partners vs. Tax Exempt High Yield
Performance |
| Timeline |
| Legg Mason Partners |
| Tax Exempt High |
Legg Mason and Tax-exempt High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Tax-exempt High
The main advantage of trading using opposite Legg Mason and Tax-exempt High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Tax-exempt High 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 Tax-exempt High will offset losses from the drop in Tax-exempt High's long position.| Legg Mason vs. Vanguard Total Stock | Legg Mason vs. Vanguard 500 Index | Legg Mason vs. Vanguard Total Stock | Legg Mason vs. Vanguard Total Stock |
| Tax-exempt High vs. Matson Money Fixed | Tax-exempt High vs. T Rowe Price | Tax-exempt High vs. Usaa Mutual Funds | Tax-exempt High vs. Legg Mason Partners |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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