Correlation Between Legg Mason and Fidelity Convertible
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Fidelity Convertible 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 Convertible 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 Vertible Securities, you can compare the effects of market volatilities on Legg Mason and Fidelity Convertible 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 Convertible. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Fidelity Convertible.
Diversification Opportunities for Legg Mason and Fidelity Convertible
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Legg and Fidelity is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Global and Fidelity Vertible Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Convertible 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 Convertible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Convertible has no effect on the direction of Legg Mason i.e., Legg Mason and Fidelity Convertible go up and down completely randomly.
Pair Corralation between Legg Mason and Fidelity Convertible
Assuming the 90 days horizon Legg Mason is expected to generate 2.39 times less return on investment than Fidelity Convertible. But when comparing it to its historical volatility, Legg Mason Global is 1.63 times less risky than Fidelity Convertible. It trades about 0.04 of its potential returns per unit of risk. Fidelity Vertible Securities is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 2,951 in Fidelity Vertible Securities on October 13, 2024 and sell it today you would earn a total of 487.00 from holding Fidelity Vertible Securities or generate 16.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Legg Mason Global vs. Fidelity Vertible Securities
Performance |
| Timeline |
| Legg Mason Global |
| Fidelity Convertible |
Legg Mason and Fidelity Convertible Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Fidelity Convertible
The main advantage of trading using opposite Legg Mason and Fidelity Convertible positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Fidelity Convertible 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 Convertible will offset losses from the drop in Fidelity Convertible's long position.| Legg Mason vs. Ridgeworth Seix Government | Legg Mason vs. Intermediate Government Bond | Legg Mason vs. Dreyfus Government Cash | Legg Mason vs. Franklin Adjustable Government |
| Fidelity Convertible vs. Legg Mason Global | Fidelity Convertible vs. Artisan Global Opportunities | Fidelity Convertible vs. Commonwealth Global Fund | Fidelity Convertible vs. Asg Global Alternatives |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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