Correlation Between Western Asset and Fidelity Asset
Can any of the company-specific risk be diversified away by investing in both Western Asset and Fidelity Asset 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 Asset 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 Asset Manager, you can compare the effects of market volatilities on Western Asset and Fidelity Asset 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 Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Fidelity Asset.
Diversification Opportunities for Western Asset and Fidelity Asset
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Western and Fidelity is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset High and Fidelity Asset Manager in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Asset Manager 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 Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Asset Manager has no effect on the direction of Western Asset i.e., Western Asset and Fidelity Asset go up and down completely randomly.
Pair Corralation between Western Asset and Fidelity Asset
Assuming the 90 days horizon Western Asset is expected to generate 3.7 times less return on investment than Fidelity Asset. But when comparing it to its historical volatility, Western Asset High is 1.94 times less risky than Fidelity Asset. It trades about 0.16 of its potential returns per unit of risk. Fidelity Asset Manager is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 1,367 in Fidelity Asset Manager on September 3, 2024 and sell it today you would earn a total of 22.00 from holding Fidelity Asset Manager or generate 1.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset High vs. Fidelity Asset Manager
Performance |
| Timeline |
| Western Asset High |
| Fidelity Asset Manager |
Western Asset and Fidelity Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Fidelity Asset
The main advantage of trading using opposite Western Asset and Fidelity Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Fidelity Asset 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 Asset will offset losses from the drop in Fidelity Asset's long position.| Western Asset vs. Lord Abbett Convertible | Western Asset vs. Allianzgi Convertible Income | Western Asset vs. Putnam Convertible Incm Gwth | Western Asset vs. Virtus Convertible |
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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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