Correlation Between Legg Mason and Fidelity California
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Fidelity California 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 Fidelity California into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Legg Mason Partners and Fidelity California Municipal, you can compare the effects of market volatilities on Legg Mason and Fidelity California 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 Fidelity California. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Fidelity California.
Diversification Opportunities for Legg Mason and Fidelity California
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Legg and Fidelity is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Partners and Fidelity California Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity California 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 Partners are associated (or correlated) with Fidelity California. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity California has no effect on the direction of Legg Mason i.e., Legg Mason and Fidelity California go up and down completely randomly.
Pair Corralation between Legg Mason and Fidelity California
If you would invest 1,224 in Fidelity California Municipal on September 3, 2024 and sell it today you would earn a total of 15.00 from holding Fidelity California Municipal or generate 1.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Legg Mason Partners vs. Fidelity California Municipal
Performance |
| Timeline |
| Legg Mason Partners |
| Fidelity California |
Legg Mason and Fidelity California Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Fidelity California
The main advantage of trading using opposite Legg Mason and Fidelity California positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Fidelity California 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 Fidelity California will offset losses from the drop in Fidelity California's long position.| Legg Mason vs. Vanguard Total Stock | Legg Mason vs. Vanguard 500 Index | Legg Mason vs. Vanguard Total Stock | Legg Mason vs. Vanguard Total Stock |
| Fidelity California vs. Legg Mason Partners | Fidelity California vs. Ep Emerging Markets | Fidelity California vs. Mondrian Emerging Markets | Fidelity California vs. Shelton Emerging Markets |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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