Correlation Between Kensington Active and Leggmason Partners
Can any of the company-specific risk be diversified away by investing in both Kensington Active and Leggmason Partners 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 Kensington Active and Leggmason Partners into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kensington Active Advantage and Leggmason Partners Institutional, you can compare the effects of market volatilities on Kensington Active and Leggmason Partners 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 Kensington Active with a short position of Leggmason Partners. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kensington Active and Leggmason Partners.
Diversification Opportunities for Kensington Active and Leggmason Partners
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Kensington and Leggmason is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Kensington Active Advantage and Leggmason Partners Institution in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leggmason Partners and Kensington Active 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 Kensington Active Advantage are associated (or correlated) with Leggmason Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leggmason Partners has no effect on the direction of Kensington Active i.e., Kensington Active and Leggmason Partners go up and down completely randomly.
Pair Corralation between Kensington Active and Leggmason Partners
If you would invest 100.00 in Leggmason Partners Institutional on September 25, 2024 and sell it today you would earn a total of 0.00 from holding Leggmason Partners Institutional or generate 0.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Flat |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Kensington Active Advantage vs. Leggmason Partners Institution
Performance |
Timeline |
Kensington Active |
Leggmason Partners |
Kensington Active and Leggmason Partners Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Kensington Active and Leggmason Partners
The main advantage of trading using opposite Kensington Active and Leggmason Partners positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kensington Active position performs unexpectedly, Leggmason Partners 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 Leggmason Partners will offset losses from the drop in Leggmason Partners' long position.The idea behind Kensington Active Advantage and Leggmason Partners Institutional pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
Leggmason Partners vs. Vanguard Total Stock | Leggmason Partners vs. Vanguard 500 Index | Leggmason Partners vs. Vanguard Total Stock | Leggmason Partners 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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