Correlation Between Western Asset and Fidelity 500
Can any of the company-specific risk be diversified away by investing in both Western Asset and Fidelity 500 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 Western Asset and Fidelity 500 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Premier and Fidelity 500 Index, you can compare the effects of market volatilities on Western Asset and Fidelity 500 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 Western Asset with a short position of Fidelity 500. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Fidelity 500.
Diversification Opportunities for Western Asset and Fidelity 500
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Western and Fidelity is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Premier and Fidelity 500 Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity 500 Index and Western Asset 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 Western Asset Premier are associated (or correlated) with Fidelity 500. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity 500 Index has no effect on the direction of Western Asset i.e., Western Asset and Fidelity 500 go up and down completely randomly.
Pair Corralation between Western Asset and Fidelity 500
Assuming the 90 days horizon Western Asset is expected to generate 3.24 times less return on investment than Fidelity 500. In addition to that, Western Asset is 1.76 times more volatile than Fidelity 500 Index. It trades about 0.02 of its total potential returns per unit of risk. Fidelity 500 Index is currently generating about 0.11 per unit of volatility. If you would invest 13,289 in Fidelity 500 Index on August 30, 2024 and sell it today you would earn a total of 7,541 from holding Fidelity 500 Index or generate 56.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.61% |
| Values | Daily Returns |
Western Asset Premier vs. Fidelity 500 Index
Performance |
| Timeline |
| Western Asset Premier |
| Fidelity 500 Index |
Western Asset and Fidelity 500 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Fidelity 500
The main advantage of trading using opposite Western Asset and Fidelity 500 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Fidelity 500 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 500 will offset losses from the drop in Fidelity 500's long position.| Western Asset vs. Angel Oak Multi Strategy | Western Asset vs. T Rowe Price | Western Asset vs. Dodge Cox Emerging | Western Asset vs. T Rowe Price |
| Fidelity 500 vs. Fidelity Total Market | Fidelity 500 vs. Fidelity Extended Market | Fidelity 500 vs. Fidelity Zero Total | Fidelity 500 vs. Fidelity Small Cap |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
Other Complementary Tools
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets |