Correlation Between Dupont De and Legg Mason

Can any of the company-specific risk be diversified away by investing in both Dupont De and Legg Mason 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 Dupont De and Legg Mason into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Dupont De Nemours and Legg Mason Partners, you can compare the effects of market volatilities on Dupont De and Legg Mason 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 Dupont De with a short position of Legg Mason. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dupont De and Legg Mason.

Diversification Opportunities for Dupont De and Legg Mason

0.53

Correlation Coefficient

Dupont De  Legg Mason

Very weak diversification

The 3 months correlation between Dupont and Legg is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and Legg Mason Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Legg Mason Partners and Dupont De 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 Dupont De Nemours are associated (or correlated) with Legg Mason. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Legg Mason Partners has no effect on the direction of Dupont De i.e., Dupont De and Legg Mason go up and down completely randomly.

Pair Corralation between Dupont De and Legg Mason

Allowing for the 90-day total investment horizon Dupont De is expected to generate 1.16 times less return on investment than Legg Mason. In addition to that, Dupont De is 7.74 times more volatile than Legg Mason Partners. It trades about 0.03 of its total potential returns per unit of risk. Legg Mason Partners is currently generating about 0.24 per unit of volatility. If you would invest  655.00  in Legg Mason Partners on September 2, 2024 and sell it today you would earn a total of  18.00  from holding Legg Mason Partners or generate 2.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Dupont De Nemours  vs.  Legg Mason Partners

Dupont De Nemours

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dupont De Nemours are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Dupont De is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Legg Mason Partners

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Legg Mason Partners are ranked lower than 19 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong primary indicators, Legg Mason is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Dupont De and Legg Mason

The main advantage of trading using opposite Dupont De and Legg Mason positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dupont De position performs unexpectedly, Legg Mason 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 Legg Mason will offset losses from the drop in Legg Mason's long position.

The idea behind Dupont De Nemours and Legg Mason Partners pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.