Correlation Between Dupont De and Legg Mason
Can any of the company-specific risk be diversified away by investing in both Dupont De 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 Dupont De and Legg Mason into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dupont De Nemours and Legg Mason Partners, you can compare the effects of market volatilities on Dupont De 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 Dupont De with a short position of Legg Mason. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dupont De and Legg Mason.
Diversification Opportunities for Dupont De and Legg Mason
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Dupont and Legg is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and Legg Mason Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Legg Mason Partners and Dupont De 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 Dupont De Nemours 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 Partners has no effect on the direction of Dupont De i.e., Dupont De and Legg Mason go up and down completely randomly.
Pair Corralation between Dupont De and Legg Mason
Allowing for the 90-day total investment horizon Dupont De Nemours is expected to under-perform the Legg Mason. In addition to that, Dupont De is 2.75 times more volatile than Legg Mason Partners. It trades about -0.06 of its total potential returns per unit of risk. Legg Mason Partners is currently generating about 0.14 per unit of volatility. 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 | 100.0% |
| Values | Daily Returns |
Dupont De Nemours vs. Legg Mason Partners
Performance |
| Timeline |
| Dupont De Nemours |
| Legg Mason Partners |
Dupont De and Legg Mason Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dupont De and Legg Mason
The main advantage of trading using opposite Dupont De and Legg Mason positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dupont De 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.| Dupont De vs. Griffon | Dupont De vs. Merck Company | Dupont De vs. Brinker International | Dupont De vs. Alcoa Corp |
| Legg Mason vs. Transamerica Intermediate Muni | Legg Mason vs. T Rowe Price | Legg Mason vs. T Rowe Price | Legg Mason vs. Bbh Intermediate Municipal |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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