Correlation Between Legg Mason and 1290 Doubleline
Can any of the company-specific risk be diversified away by investing in both Legg Mason and 1290 Doubleline 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 1290 Doubleline 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 1290 Doubleline Dynamic, you can compare the effects of market volatilities on Legg Mason and 1290 Doubleline 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 1290 Doubleline. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and 1290 Doubleline.
Diversification Opportunities for Legg Mason and 1290 Doubleline
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Legg and 1290 is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Partners and 1290 Doubleline Dynamic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 1290 Doubleline Dynamic 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 1290 Doubleline. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 1290 Doubleline Dynamic has no effect on the direction of Legg Mason i.e., Legg Mason and 1290 Doubleline go up and down completely randomly.
Pair Corralation between Legg Mason and 1290 Doubleline
Assuming the 90 days horizon Legg Mason is expected to generate 3.01 times less return on investment than 1290 Doubleline. But when comparing it to its historical volatility, Legg Mason Partners is 2.11 times less risky than 1290 Doubleline. It trades about 0.13 of its potential returns per unit of risk. 1290 Doubleline Dynamic is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 1,039 in 1290 Doubleline Dynamic on August 29, 2024 and sell it today you would earn a total of 65.00 from holding 1290 Doubleline Dynamic or generate 6.26% 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. 1290 Doubleline Dynamic
Performance |
| Timeline |
| Legg Mason Partners |
| 1290 Doubleline Dynamic |
Legg Mason and 1290 Doubleline Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and 1290 Doubleline
The main advantage of trading using opposite Legg Mason and 1290 Doubleline positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, 1290 Doubleline 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 1290 Doubleline will offset losses from the drop in 1290 Doubleline's long position.| Legg Mason vs. Short Precious Metals | Legg Mason vs. The Gold Bullion | Legg Mason vs. First Eagle Gold | Legg Mason vs. Invesco Gold Special |
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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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