Correlation Between Legg Mason and Fidelity Series
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Fidelity Series 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 Series into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Legg Mason Global and Fidelity Series Government, you can compare the effects of market volatilities on Legg Mason and Fidelity Series 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 Series. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Fidelity Series.
Diversification Opportunities for Legg Mason and Fidelity Series
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Legg and Fidelity is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Global and Fidelity Series Government in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Series Gove 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 Global are associated (or correlated) with Fidelity Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Series Gove has no effect on the direction of Legg Mason i.e., Legg Mason and Fidelity Series go up and down completely randomly.
Pair Corralation between Legg Mason and Fidelity Series
Assuming the 90 days horizon Legg Mason Global is expected to generate 0.75 times more return on investment than Fidelity Series. However, Legg Mason Global is 1.33 times less risky than Fidelity Series. It trades about 0.29 of its potential returns per unit of risk. Fidelity Series Government is currently generating about 0.19 per unit of risk. If you would invest 948.00 in Legg Mason Global on September 14, 2024 and sell it today you would earn a total of 11.00 from holding Legg Mason Global or generate 1.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Legg Mason Global vs. Fidelity Series Government
Performance |
| Timeline |
| Legg Mason Global |
| Fidelity Series Gove |
Legg Mason and Fidelity Series Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Fidelity Series
The main advantage of trading using opposite Legg Mason and Fidelity Series positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Fidelity Series 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 Series will offset losses from the drop in Fidelity Series' long position.| Legg Mason vs. Multimedia Portfolio Multimedia | Legg Mason vs. Rbc Global Equity | Legg Mason vs. Gmo Global Equity | Legg Mason vs. Ms Global Fixed |
| Fidelity Series vs. Franklin Mutual Global | Fidelity Series vs. Morningstar Global Income | Fidelity Series vs. Legg Mason Global | Fidelity Series vs. Investec Global Franchise |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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