Correlation Between Legg Mason and Dunham High
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Dunham High 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 Dunham High 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 Dunham High Yield, you can compare the effects of market volatilities on Legg Mason and Dunham High 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 Dunham High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Dunham High.
Diversification Opportunities for Legg Mason and Dunham High
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Legg and Dunham is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Partners and Dunham High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dunham 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 Dunham High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dunham High Yield has no effect on the direction of Legg Mason i.e., Legg Mason and Dunham High go up and down completely randomly.
Pair Corralation between Legg Mason and Dunham High
Assuming the 90 days trading horizon Legg Mason is expected to generate 1.14 times less return on investment than Dunham High. In addition to that, Legg Mason is 1.34 times more volatile than Dunham High Yield. It trades about 0.22 of its total potential returns per unit of risk. Dunham High Yield is currently generating about 0.34 per unit of volatility. If you would invest 878.00 in Dunham High Yield on August 31, 2024 and sell it today you would earn a total of 9.00 from holding Dunham High Yield or generate 1.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Legg Mason Partners vs. Dunham High Yield
Performance |
| Timeline |
| Legg Mason Partners |
| Dunham High Yield |
Legg Mason and Dunham High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Dunham High
The main advantage of trading using opposite Legg Mason and Dunham High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Dunham High 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 Dunham High will offset losses from the drop in Dunham High's long position.| Legg Mason vs. Vanguard Total Stock | Legg Mason vs. Vanguard 500 Index | Legg Mason vs. Vanguard Total Stock | Legg Mason vs. Vanguard Total Stock |
| Dunham High vs. Vanguard High Yield Corporate | Dunham High vs. Vanguard High Yield Porate | Dunham High vs. Blackrock Hi Yld | Dunham High vs. Blackrock 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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