Correlation Between Fidelity Asset and Western Asset
Can any of the company-specific risk be diversified away by investing in both Fidelity Asset and Western Asset 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 Asset and Western Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Asset Manager and Western Asset Municipal, you can compare the effects of market volatilities on Fidelity Asset and Western Asset 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 Asset with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Asset and Western Asset.
Diversification Opportunities for Fidelity Asset and Western Asset
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Fidelity and Western is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Asset Manager and Western Asset Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Municipal and Fidelity Asset 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 Asset Manager are associated (or correlated) with Western Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Asset Municipal has no effect on the direction of Fidelity Asset i.e., Fidelity Asset and Western Asset go up and down completely randomly.
Pair Corralation between Fidelity Asset and Western Asset
Assuming the 90 days horizon Fidelity Asset Manager is expected to generate 1.07 times more return on investment than Western Asset. However, Fidelity Asset is 1.07 times more volatile than Western Asset Municipal. It trades about 0.11 of its potential returns per unit of risk. Western Asset Municipal is currently generating about -0.03 per unit of risk. If you would invest 1,299 in Fidelity Asset Manager on August 28, 2024 and sell it today you would earn a total of 82.00 from holding Fidelity Asset Manager or generate 6.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Asset Manager vs. Western Asset Municipal
Performance |
| Timeline |
| Fidelity Asset Manager |
| Western Asset Municipal |
Fidelity Asset and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Asset and Western Asset
The main advantage of trading using opposite Fidelity Asset and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Asset position performs unexpectedly, Western Asset 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 Western Asset will offset losses from the drop in Western Asset's long position.| Fidelity Asset vs. Fidelity Freedom 2015 | Fidelity Asset vs. Fidelity Puritan Fund | Fidelity Asset vs. Fidelity Puritan Fund | Fidelity Asset vs. Fidelity Pennsylvania Municipal |
| Western Asset vs. Baird Strategic Municipal | Western Asset vs. Counterpoint Tactical Municipal | Western Asset vs. California High Yield Municipal | Western Asset vs. Alliancebernstein National Municipal |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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