Correlation Between Legg Mason and Delaware High-yield

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Can any of the company-specific risk be diversified away by investing in both Legg Mason and Delaware High-yield 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 Delaware High-yield 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 Delaware High Yield Opportunities, you can compare the effects of market volatilities on Legg Mason and Delaware High-yield 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 Delaware High-yield. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Delaware High-yield.

Diversification Opportunities for Legg Mason and Delaware High-yield

0.4
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Legg and Delaware is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Partners and Delaware High Yield Opportunit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delaware 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 Partners are associated (or correlated) with Delaware High-yield. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delaware High Yield has no effect on the direction of Legg Mason i.e., Legg Mason and Delaware High-yield go up and down completely randomly.

Pair Corralation between Legg Mason and Delaware High-yield

If you would invest  1,278  in Legg Mason Partners on September 5, 2024 and sell it today you would earn a total of  35.00  from holding Legg Mason Partners or generate 2.74% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy2.38%
ValuesDaily Returns

Legg Mason Partners  vs.  Delaware High Yield Opportunit

 Performance 
       Timeline  
Legg Mason Partners 

Risk-Adjusted Performance

13 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Legg Mason Partners are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong primary indicators, Legg Mason is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Delaware High Yield 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Delaware High Yield Opportunities has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Delaware High-yield is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Legg Mason and Delaware High-yield Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Legg Mason and Delaware High-yield

The main advantage of trading using opposite Legg Mason and Delaware High-yield positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Delaware High-yield 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 Delaware High-yield will offset losses from the drop in Delaware High-yield's long position.
The idea behind Legg Mason Partners and Delaware High Yield Opportunities pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.

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