Correlation Between Legg Mason and Dfa Social
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Dfa Social 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 Dfa Social into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Legg Mason Bw and Dfa Social Fixed, you can compare the effects of market volatilities on Legg Mason and Dfa Social 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 Dfa Social. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Dfa Social.
Diversification Opportunities for Legg Mason and Dfa Social
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Legg and Dfa is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Bw and Dfa Social Fixed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dfa Social Fixed 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 Bw are associated (or correlated) with Dfa Social. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dfa Social Fixed has no effect on the direction of Legg Mason i.e., Legg Mason and Dfa Social go up and down completely randomly.
Pair Corralation between Legg Mason and Dfa Social
Assuming the 90 days horizon Legg Mason Bw is expected to generate 2.58 times more return on investment than Dfa Social. However, Legg Mason is 2.58 times more volatile than Dfa Social Fixed. It trades about 0.17 of its potential returns per unit of risk. Dfa Social Fixed is currently generating about -0.05 per unit of risk. If you would invest 2,181 in Legg Mason Bw on September 4, 2024 and sell it today you would earn a total of 193.00 from holding Legg Mason Bw or generate 8.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 98.44% |
| Values | Daily Returns |
Legg Mason Bw vs. Dfa Social Fixed
Performance |
| Timeline |
| Legg Mason Bw |
| Dfa Social Fixed |
Legg Mason and Dfa Social Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Dfa Social
The main advantage of trading using opposite Legg Mason and Dfa Social positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Dfa Social 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 Dfa Social will offset losses from the drop in Dfa Social's long position.| Legg Mason vs. Clearbridge Aggressive Growth | Legg Mason vs. Clearbridge Small Cap | Legg Mason vs. Qs International Equity | Legg Mason vs. Clearbridge Appreciation Fund |
| Dfa Social vs. Pgim Jennison Diversified | Dfa Social vs. Lord Abbett Diversified | Dfa Social vs. Legg Mason Bw | Dfa Social vs. Harbor Diversified International |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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