Correlation Between Leggmason Partners and Dodge Cox
Can any of the company-specific risk be diversified away by investing in both Leggmason Partners and Dodge Cox 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 Leggmason Partners and Dodge Cox into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Leggmason Partners Institutional and Dodge Cox Global, you can compare the effects of market volatilities on Leggmason Partners and Dodge Cox 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 Leggmason Partners with a short position of Dodge Cox. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leggmason Partners and Dodge Cox.
Diversification Opportunities for Leggmason Partners and Dodge Cox
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Leggmason and Dodge is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Leggmason Partners Institution and Dodge Cox Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dodge Cox Global and Leggmason Partners 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 Leggmason Partners Institutional are associated (or correlated) with Dodge Cox. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dodge Cox Global has no effect on the direction of Leggmason Partners i.e., Leggmason Partners and Dodge Cox go up and down completely randomly.
Pair Corralation between Leggmason Partners and Dodge Cox
Assuming the 90 days horizon Leggmason Partners is expected to generate 3.22 times less return on investment than Dodge Cox. But when comparing it to its historical volatility, Leggmason Partners Institutional is 7.76 times less risky than Dodge Cox. It trades about 0.09 of its potential returns per unit of risk. Dodge Cox Global is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,569 in Dodge Cox Global on September 19, 2024 and sell it today you would earn a total of 47.00 from holding Dodge Cox Global or generate 3.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Leggmason Partners Institution vs. Dodge Cox Global
Performance |
| Timeline |
| Leggmason Partners |
| Dodge Cox Global |
Leggmason Partners and Dodge Cox Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leggmason Partners and Dodge Cox
The main advantage of trading using opposite Leggmason Partners and Dodge Cox positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leggmason Partners position performs unexpectedly, Dodge Cox 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 Dodge Cox will offset losses from the drop in Dodge Cox's long position.| Leggmason Partners vs. Alliancebernstein Bond | Leggmason Partners vs. Pace High Yield | Leggmason Partners vs. Ab Global Bond | Leggmason Partners vs. Bbh Intermediate Municipal |
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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