Correlation Between Legg Mason and Dunham High
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Dunham High 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 Dunham High 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 Dunham High Yield, you can compare the effects of market volatilities on Legg Mason and Dunham High 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 Dunham High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Dunham High.
Diversification Opportunities for Legg Mason and Dunham High
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Legg and Dunham is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Bw and Dunham High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dunham High Yield 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 Dunham High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dunham High Yield has no effect on the direction of Legg Mason i.e., Legg Mason and Dunham High go up and down completely randomly.
Pair Corralation between Legg Mason and Dunham High
Assuming the 90 days horizon Legg Mason Bw is expected to generate 7.18 times more return on investment than Dunham High. However, Legg Mason is 7.18 times more volatile than Dunham High Yield. It trades about 0.28 of its potential returns per unit of risk. Dunham High Yield is currently generating about 0.34 per unit of risk. If you would invest 2,243 in Legg Mason Bw on August 31, 2024 and sell it today you would earn a total of 141.00 from holding Legg Mason Bw or generate 6.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Legg Mason Bw vs. Dunham High Yield
Performance |
| Timeline |
| Legg Mason Bw |
| Dunham High Yield |
Legg Mason and Dunham High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Dunham High
The main advantage of trading using opposite Legg Mason and Dunham High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Dunham High 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 Dunham High will offset losses from the drop in Dunham High's long position.| Legg Mason vs. Vanguard Value Index | Legg Mason vs. Dodge Cox Stock | Legg Mason vs. American Mutual Fund | Legg Mason vs. American Funds American |
| Dunham High vs. Vanguard High Yield Corporate | Dunham High vs. Vanguard High Yield Porate | Dunham High vs. Blackrock Hi Yld | Dunham High vs. Blackrock High Yield |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
Other Complementary Tools
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. |