Correlation Between Legg Mason and Deutsche Enhanced
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Deutsche Enhanced 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 Deutsche Enhanced 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 Deutsche Enhanced Emerging, you can compare the effects of market volatilities on Legg Mason and Deutsche Enhanced 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 Deutsche Enhanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Deutsche Enhanced.
Diversification Opportunities for Legg Mason and Deutsche Enhanced
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Legg and Deutsche is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Partners and Deutsche Enhanced Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutsche Enhanced 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 Deutsche Enhanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deutsche Enhanced has no effect on the direction of Legg Mason i.e., Legg Mason and Deutsche Enhanced go up and down completely randomly.
Pair Corralation between Legg Mason and Deutsche Enhanced
Assuming the 90 days horizon Legg Mason is expected to generate 1.84 times less return on investment than Deutsche Enhanced. In addition to that, Legg Mason is 2.79 times more volatile than Deutsche Enhanced Emerging. It trades about 0.02 of its total potential returns per unit of risk. Deutsche Enhanced Emerging is currently generating about 0.12 per unit of volatility. If you would invest 610.00 in Deutsche Enhanced Emerging on August 28, 2024 and sell it today you would earn a total of 129.00 from holding Deutsche Enhanced Emerging or generate 21.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.16% |
| Values | Daily Returns |
Legg Mason Partners vs. Deutsche Enhanced Emerging
Performance |
| Timeline |
| Legg Mason Partners |
| Deutsche Enhanced |
Legg Mason and Deutsche Enhanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Deutsche Enhanced
The main advantage of trading using opposite Legg Mason and Deutsche Enhanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Deutsche Enhanced 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 Deutsche Enhanced will offset losses from the drop in Deutsche Enhanced'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 |
| Deutsche Enhanced vs. Deutsche Gnma Fund | Deutsche Enhanced vs. Deutsche Short Term Municipal | Deutsche Enhanced vs. Deutsche Short Term Municipal | Deutsche Enhanced vs. Deutsche Science And |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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