Correlation Between Fidelity International and Leggmason Partners
Can any of the company-specific risk be diversified away by investing in both Fidelity International and Leggmason Partners 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 Fidelity International and Leggmason Partners into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity International Discovery and Leggmason Partners Institutional, you can compare the effects of market volatilities on Fidelity International and Leggmason Partners 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 Fidelity International with a short position of Leggmason Partners. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity International and Leggmason Partners.
Diversification Opportunities for Fidelity International and Leggmason Partners
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Fidelity and Leggmason is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity International Discove and Leggmason Partners Institution in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leggmason Partners and Fidelity International 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 Fidelity International Discovery are associated (or correlated) with Leggmason Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leggmason Partners has no effect on the direction of Fidelity International i.e., Fidelity International and Leggmason Partners go up and down completely randomly.
Pair Corralation between Fidelity International and Leggmason Partners
If you would invest 100.00 in Leggmason Partners Institutional on August 31, 2024 and sell it today you would earn a total of 0.00 from holding Leggmason Partners Institutional or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity International Discove vs. Leggmason Partners Institution
Performance |
| Timeline |
| Fidelity International |
| Leggmason Partners |
Fidelity International and Leggmason Partners Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity International and Leggmason Partners
The main advantage of trading using opposite Fidelity International and Leggmason Partners positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity International position performs unexpectedly, Leggmason Partners 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 Leggmason Partners will offset losses from the drop in Leggmason Partners' long position.The idea behind Fidelity International Discovery and Leggmason Partners Institutional 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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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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