Correlation Between Fidelity Series and Legg Mason
Can any of the company-specific risk be diversified away by investing in both Fidelity Series 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 Fidelity Series and Legg Mason into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Series 1000 and Legg Mason Bw, you can compare the effects of market volatilities on Fidelity Series 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 Fidelity Series with a short position of Legg Mason. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Series and Legg Mason.
Diversification Opportunities for Fidelity Series and Legg Mason
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Fidelity and Legg is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Series 1000 and Legg Mason Bw in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Legg Mason Bw and Fidelity Series 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 Series 1000 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 Bw has no effect on the direction of Fidelity Series i.e., Fidelity Series and Legg Mason go up and down completely randomly.
Pair Corralation between Fidelity Series and Legg Mason
Assuming the 90 days horizon Fidelity Series is expected to generate 1.1 times less return on investment than Legg Mason. But when comparing it to its historical volatility, Fidelity Series 1000 is 1.11 times less risky than Legg Mason. It trades about 0.16 of its potential returns per unit of risk. Legg Mason Bw is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 2,047 in Legg Mason Bw on August 31, 2024 and sell it today you would earn a total of 329.00 from holding Legg Mason Bw or generate 16.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.21% |
| Values | Daily Returns |
Fidelity Series 1000 vs. Legg Mason Bw
Performance |
| Timeline |
| Fidelity Series 1000 |
| Legg Mason Bw |
Fidelity Series and Legg Mason Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Series and Legg Mason
The main advantage of trading using opposite Fidelity Series and Legg Mason positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Series 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.| Fidelity Series vs. Pgim Conservative Retirement | Fidelity Series vs. Delaware Limited Term Diversified | Fidelity Series vs. Pioneer Diversified High | Fidelity Series vs. Evaluator Conservative Rms |
| Legg Mason vs. Dodge Cox Stock | Legg Mason vs. American Mutual Fund | Legg Mason vs. American Funds American | Legg Mason vs. American Funds American |
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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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