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 Partners and Fidelity Series International, 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
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Legg and Fidelity is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Partners and Fidelity Series International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Series Inte 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 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 Inte 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 trading horizon Legg Mason is expected to generate 1.78 times less return on investment than Fidelity Series. But when comparing it to its historical volatility, Legg Mason Partners is 1.34 times less risky than Fidelity Series. It trades about 0.04 of its potential returns per unit of risk. Fidelity Series International is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,029 in Fidelity Series International on September 3, 2024 and sell it today you would earn a total of 260.00 from holding Fidelity Series International or generate 25.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Legg Mason Partners vs. Fidelity Series International
Performance |
| Timeline |
| Legg Mason Partners |
| Fidelity Series Inte |
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.The idea behind Legg Mason Partners and Fidelity Series International pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Fidelity Series vs. Oakmark International Fund | Fidelity Series vs. Dodge International Stock | Fidelity Series vs. Oakmark International Fund | Fidelity Series vs. Oakmark International Fund |
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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