Correlation Between Legg Mason and Dreyfus International
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Dreyfus International 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 Dreyfus International 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 Dreyfus International Bond, you can compare the effects of market volatilities on Legg Mason and Dreyfus International 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 Dreyfus International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Dreyfus International.
Diversification Opportunities for Legg Mason and Dreyfus International
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Legg and Dreyfus is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Partners and Dreyfus International Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreyfus International 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 Dreyfus International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreyfus International has no effect on the direction of Legg Mason i.e., Legg Mason and Dreyfus International go up and down completely randomly.
Pair Corralation between Legg Mason and Dreyfus International
If you would invest 1,291 in Dreyfus International Bond on September 3, 2024 and sell it today you would earn a total of 0.00 from holding Dreyfus International Bond or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Legg Mason Partners vs. Dreyfus International Bond
Performance |
| Timeline |
| Legg Mason Partners |
| Dreyfus International |
Legg Mason and Dreyfus International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Dreyfus International
The main advantage of trading using opposite Legg Mason and Dreyfus International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Dreyfus International 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 Dreyfus International will offset losses from the drop in Dreyfus International'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 |
| Dreyfus International vs. Calamos Market Neutral | Dreyfus International vs. Legg Mason Partners | Dreyfus International vs. Ep Emerging Markets | Dreyfus International vs. The Emerging Markets |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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