Correlation Between Western Assets and Fidelity Asset
Can any of the company-specific risk be diversified away by investing in both Western Assets 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 Assets 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 Assets Emerging and Fidelity Asset Manager, you can compare the effects of market volatilities on Western Assets 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 Assets with a short position of Fidelity Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Assets and Fidelity Asset.
Diversification Opportunities for Western Assets and Fidelity Asset
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Western and Fidelity is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Western Assets Emerging 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 Assets 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 Assets Emerging 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 Assets i.e., Western Assets and Fidelity Asset go up and down completely randomly.
Pair Corralation between Western Assets and Fidelity Asset
Assuming the 90 days horizon Western Assets Emerging is expected to generate 1.18 times more return on investment than Fidelity Asset. However, Western Assets is 1.18 times more volatile than Fidelity Asset Manager. It trades about 0.1 of its potential returns per unit of risk. Fidelity Asset Manager is currently generating about 0.07 per unit of risk. If you would invest 880.00 in Western Assets Emerging on September 12, 2024 and sell it today you would earn a total of 210.00 from holding Western Assets Emerging or generate 23.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Western Assets Emerging vs. Fidelity Asset Manager
Performance |
| Timeline |
| Western Assets Emerging |
| Fidelity Asset Manager |
Western Assets and Fidelity Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Assets and Fidelity Asset
The main advantage of trading using opposite Western Assets and Fidelity Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Assets 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 Assets vs. Cb Large Cap | Western Assets vs. American Mutual Fund | Western Assets vs. Americafirst Large Cap | Western Assets vs. Dodge Cox Stock |
| Fidelity Asset vs. Versatile Bond Portfolio | Fidelity Asset vs. Doubleline Yield Opportunities | Fidelity Asset vs. Touchstone Premium Yield | Fidelity Asset vs. Ab Global Bond |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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