Correlation Between Legg Mason and Deutsche Intermediate
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Deutsche Intermediate 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 Deutsche Intermediate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Legg Mason Global and Deutsche Intermediate Taxamt, you can compare the effects of market volatilities on Legg Mason and Deutsche Intermediate 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 Deutsche Intermediate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Deutsche Intermediate.
Diversification Opportunities for Legg Mason and Deutsche Intermediate
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Legg and Deutsche is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Global and Deutsche Intermediate Taxamt in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutsche Intermediate 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 Global are associated (or correlated) with Deutsche Intermediate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deutsche Intermediate has no effect on the direction of Legg Mason i.e., Legg Mason and Deutsche Intermediate go up and down completely randomly.
Pair Corralation between Legg Mason and Deutsche Intermediate
Assuming the 90 days horizon Legg Mason is expected to generate 1.73 times less return on investment than Deutsche Intermediate. In addition to that, Legg Mason is 2.05 times more volatile than Deutsche Intermediate Taxamt. It trades about 0.02 of its total potential returns per unit of risk. Deutsche Intermediate Taxamt is currently generating about 0.06 per unit of volatility. If you would invest 1,032 in Deutsche Intermediate Taxamt on October 7, 2024 and sell it today you would earn a total of 63.00 from holding Deutsche Intermediate Taxamt or generate 6.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Legg Mason Global vs. Deutsche Intermediate Taxamt
Performance |
| Timeline |
| Legg Mason Global |
| Deutsche Intermediate |
Legg Mason and Deutsche Intermediate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Deutsche Intermediate
The main advantage of trading using opposite Legg Mason and Deutsche Intermediate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Deutsche Intermediate 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 Deutsche Intermediate will offset losses from the drop in Deutsche Intermediate's long position.| Legg Mason vs. Ms Global Fixed | Legg Mason vs. Ab Global Bond | Legg Mason vs. Alliancebernstein Global Highome | Legg Mason vs. Qs Global Equity |
| Deutsche Intermediate vs. Voya High Yield | Deutsche Intermediate vs. Pace High Yield | Deutsche Intermediate vs. Artisan High Income | Deutsche Intermediate vs. Inverse 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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