Correlation Between Fidelity Flex and Western Asset
Can any of the company-specific risk be diversified away by investing in both Fidelity Flex 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 Flex 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 Flex Servative and Western Asset Municipal, you can compare the effects of market volatilities on Fidelity Flex 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 Flex with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Flex and Western Asset.
Diversification Opportunities for Fidelity Flex and Western Asset
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Fidelity and Western is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Flex Servative 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 Flex 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 Flex Servative 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 Flex i.e., Fidelity Flex and Western Asset go up and down completely randomly.
Pair Corralation between Fidelity Flex and Western Asset
Assuming the 90 days horizon Fidelity Flex Servative is expected to generate 0.35 times more return on investment than Western Asset. However, Fidelity Flex Servative is 2.84 times less risky than Western Asset. It trades about 0.27 of its potential returns per unit of risk. Western Asset Municipal is currently generating about 0.07 per unit of risk. If you would invest 999.00 in Fidelity Flex Servative on October 24, 2024 and sell it today you would earn a total of 4.00 from holding Fidelity Flex Servative or generate 0.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Flex Servative vs. Western Asset Municipal
Performance |
| Timeline |
| Fidelity Flex Servative |
| Western Asset Municipal |
Fidelity Flex and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Flex and Western Asset
The main advantage of trading using opposite Fidelity Flex and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Flex 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 Flex vs. Metropolitan West Porate | Fidelity Flex vs. Ambrus Core Bond | Fidelity Flex vs. Franklin High Yield | Fidelity Flex vs. Bbh Intermediate Municipal |
| Western Asset vs. Inverse Government Long | Western Asset vs. Transamerica Intermediate Muni | Western Asset vs. Intermediate Term Tax Free Bond | Western Asset vs. Old Westbury 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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