Correlation Between Legg Mason and Diamond Hill
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Diamond Hill 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 Diamond Hill into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Legg Mason and Diamond Hill Investment, you can compare the effects of market volatilities on Legg Mason and Diamond Hill 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 Diamond Hill. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Diamond Hill.
Diversification Opportunities for Legg Mason and Diamond Hill
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Legg and Diamond is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason and Diamond Hill Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diamond Hill Investment 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 are associated (or correlated) with Diamond Hill. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diamond Hill Investment has no effect on the direction of Legg Mason i.e., Legg Mason and Diamond Hill go up and down completely randomly.
Pair Corralation between Legg Mason and Diamond Hill
If you would invest 14,974 in Diamond Hill Investment on January 26, 2024 and sell it today you would earn a total of 196.00 from holding Diamond Hill Investment or generate 1.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
Legg Mason vs. Diamond Hill Investment
Performance |
| Timeline |
| Legg Mason |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Diamond Hill Investment |
Legg Mason and Diamond Hill Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Diamond Hill
The main advantage of trading using opposite Legg Mason and Diamond Hill positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Diamond Hill 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 Diamond Hill will offset losses from the drop in Diamond Hill's long position.| Legg Mason vs. BioNTech SE | Legg Mason vs. Harmony Gold Mining | Legg Mason vs. US GoldMining Common | Legg Mason vs. HUTCHMED DRC |
| Diamond Hill vs. Federated Premier Municipal | Diamond Hill vs. Blackrock Muniyield | Diamond Hill vs. NXG NextGen Infrastructure | Diamond Hill vs. Brightsphere Investment Group |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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