Correlation Between Dunham Large and Legg Mason
Can any of the company-specific risk be diversified away by investing in both Dunham Large 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 Dunham Large and Legg Mason into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dunham Large Cap and Legg Mason Bw, you can compare the effects of market volatilities on Dunham Large 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 Dunham Large with a short position of Legg Mason. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dunham Large and Legg Mason.
Diversification Opportunities for Dunham Large and Legg Mason
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Dunham and Legg is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Dunham Large Cap and Legg Mason Bw in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Legg Mason Bw and Dunham Large 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 Dunham Large Cap 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 Bw has no effect on the direction of Dunham Large i.e., Dunham Large and Legg Mason go up and down completely randomly.
Pair Corralation between Dunham Large and Legg Mason
Assuming the 90 days horizon Dunham Large Cap is expected to generate 0.84 times more return on investment than Legg Mason. However, Dunham Large Cap is 1.19 times less risky than Legg Mason. It trades about 0.06 of its potential returns per unit of risk. Legg Mason Bw is currently generating about 0.04 per unit of risk. If you would invest 1,623 in Dunham Large Cap on September 2, 2024 and sell it today you would earn a total of 360.00 from holding Dunham Large Cap or generate 22.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dunham Large Cap vs. Legg Mason Bw
Performance |
| Timeline |
| Dunham Large Cap |
| Legg Mason Bw |
Dunham Large and Legg Mason Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dunham Large and Legg Mason
The main advantage of trading using opposite Dunham Large and Legg Mason positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dunham Large 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.| Dunham Large vs. Dunham Dynamic Macro | Dunham Large vs. Dunham Appreciation Income | Dunham Large vs. Dunham Small Cap | Dunham Large vs. Dunham Emerging Markets |
| Legg Mason vs. Franklin Mutual Beacon | Legg Mason vs. Templeton Developing Markets | Legg Mason vs. Franklin Mutual Global | Legg Mason vs. Franklin Mutual Global |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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