Correlation Between Western Asset and Fidelity Advisor
Can any of the company-specific risk be diversified away by investing in both Western Asset and Fidelity Advisor 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 Advisor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset High and Fidelity Advisor Sumer, you can compare the effects of market volatilities on Western Asset and Fidelity Advisor 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 Advisor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Fidelity Advisor.
Diversification Opportunities for Western Asset and Fidelity Advisor
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Western and Fidelity is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset High and Fidelity Advisor Sumer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Advisor Sumer 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 High are associated (or correlated) with Fidelity Advisor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Advisor Sumer has no effect on the direction of Western Asset i.e., Western Asset and Fidelity Advisor go up and down completely randomly.
Pair Corralation between Western Asset and Fidelity Advisor
Assuming the 90 days horizon Western Asset is expected to generate 16.53 times less return on investment than Fidelity Advisor. But when comparing it to its historical volatility, Western Asset High is 6.93 times less risky than Fidelity Advisor. It trades about 0.15 of its potential returns per unit of risk. Fidelity Advisor Sumer is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest 4,465 in Fidelity Advisor Sumer on August 28, 2024 and sell it today you would earn a total of 435.00 from holding Fidelity Advisor Sumer or generate 9.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset High vs. Fidelity Advisor Sumer
Performance |
| Timeline |
| Western Asset High |
| Fidelity Advisor Sumer |
Western Asset and Fidelity Advisor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Fidelity Advisor
The main advantage of trading using opposite Western Asset and Fidelity Advisor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Fidelity Advisor 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 Advisor will offset losses from the drop in Fidelity Advisor's long position.| Western Asset vs. Clearbridge Aggressive Growth | Western Asset vs. Clearbridge Small Cap | Western Asset vs. Qs International Equity | Western Asset vs. Clearbridge Appreciation Fund |
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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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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