Correlation Between Legg Mason and Dimensional 2035
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Dimensional 2035 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 Dimensional 2035 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 Dimensional 2035 Target, you can compare the effects of market volatilities on Legg Mason and Dimensional 2035 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 Dimensional 2035. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Dimensional 2035.
Diversification Opportunities for Legg Mason and Dimensional 2035
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Legg and Dimensional is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Partners and Dimensional 2035 Target in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dimensional 2035 Target 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 Dimensional 2035. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dimensional 2035 Target has no effect on the direction of Legg Mason i.e., Legg Mason and Dimensional 2035 go up and down completely randomly.
Pair Corralation between Legg Mason and Dimensional 2035
Assuming the 90 days trading horizon Legg Mason Partners is expected to generate 1.37 times more return on investment than Dimensional 2035. However, Legg Mason is 1.37 times more volatile than Dimensional 2035 Target. It trades about 0.33 of its potential returns per unit of risk. Dimensional 2035 Target is currently generating about 0.23 per unit of risk. If you would invest 2,348 in Legg Mason Partners on September 1, 2024 and sell it today you would earn a total of 119.00 from holding Legg Mason Partners or generate 5.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Legg Mason Partners vs. Dimensional 2035 Target
Performance |
| Timeline |
| Legg Mason Partners |
| Dimensional 2035 Target |
Legg Mason and Dimensional 2035 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Dimensional 2035
The main advantage of trading using opposite Legg Mason and Dimensional 2035 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Dimensional 2035 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 Dimensional 2035 will offset losses from the drop in Dimensional 2035's long position.| Legg Mason vs. Siit Ultra Short | Legg Mason vs. Franklin Federal Limited Term | Legg Mason vs. The Short Term | Legg Mason vs. Maryland Short Term Tax Free |
| Dimensional 2035 vs. Intal High Relative | Dimensional 2035 vs. Dfa International | Dimensional 2035 vs. Dfa Inflation Protected | Dimensional 2035 vs. Dfa International 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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