Correlation Between Legg Mason and Df Dent
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Df Dent 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 Df Dent 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 Df Dent Small, you can compare the effects of market volatilities on Legg Mason and Df Dent 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 Df Dent. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Df Dent.
Diversification Opportunities for Legg Mason and Df Dent
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Legg and DFDSX is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Partners and Df Dent Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Df Dent Small 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 Df Dent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Df Dent Small has no effect on the direction of Legg Mason i.e., Legg Mason and Df Dent go up and down completely randomly.
Pair Corralation between Legg Mason and Df Dent
Assuming the 90 days trading horizon Legg Mason is expected to generate 1.71 times less return on investment than Df Dent. In addition to that, Legg Mason is 1.02 times more volatile than Df Dent Small. It trades about 0.04 of its total potential returns per unit of risk. Df Dent Small is currently generating about 0.07 per unit of volatility. If you would invest 2,038 in Df Dent Small on September 12, 2024 and sell it today you would earn a total of 583.00 from holding Df Dent Small or generate 28.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Legg Mason Partners vs. Df Dent Small
Performance |
| Timeline |
| Legg Mason Partners |
| Df Dent Small |
Legg Mason and Df Dent Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Df Dent
The main advantage of trading using opposite Legg Mason and Df Dent positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Df Dent 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 Df Dent will offset losses from the drop in Df Dent's long position.| Legg Mason vs. Eip Growth And | Legg Mason vs. Ftfa Franklin Templeton Growth | Legg Mason vs. Chase Growth Fund | Legg Mason vs. Pace Smallmedium Growth |
| Df Dent vs. Valic Company I | Df Dent vs. Omni Small Cap Value | Df Dent vs. Ab Discovery Value | Df Dent vs. Boston Partners Small |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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