Correlation Between Western Asset and Fidelity Trafund
Can any of the company-specific risk be diversified away by investing in both Western Asset and Fidelity Trafund 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 Trafund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Municipal and Fidelity Trafund Class, you can compare the effects of market volatilities on Western Asset and Fidelity Trafund 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 Trafund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Fidelity Trafund.
Diversification Opportunities for Western Asset and Fidelity Trafund
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Western and Fidelity is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Municipal and Fidelity Trafund Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Trafund Class 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 Municipal are associated (or correlated) with Fidelity Trafund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Trafund Class has no effect on the direction of Western Asset i.e., Western Asset and Fidelity Trafund go up and down completely randomly.
Pair Corralation between Western Asset and Fidelity Trafund
Assuming the 90 days horizon Western Asset is expected to generate 12.13 times less return on investment than Fidelity Trafund. But when comparing it to its historical volatility, Western Asset Municipal is 3.43 times less risky than Fidelity Trafund. It trades about 0.03 of its potential returns per unit of risk. Fidelity Trafund Class is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,503 in Fidelity Trafund Class on September 12, 2024 and sell it today you would earn a total of 670.00 from holding Fidelity Trafund Class or generate 44.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Municipal vs. Fidelity Trafund Class
Performance |
| Timeline |
| Western Asset Municipal |
| Fidelity Trafund Class |
Western Asset and Fidelity Trafund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Fidelity Trafund
The main advantage of trading using opposite Western Asset and Fidelity Trafund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Fidelity Trafund 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 Trafund will offset losses from the drop in Fidelity Trafund's long position.| Western Asset vs. Barings Active Short | Western Asset vs. Cmg Ultra Short | Western Asset vs. Blackrock Short Term Inflat Protected | Western Asset vs. Rbc Short Duration |
| Fidelity Trafund vs. Falcon Focus Scv | Fidelity Trafund vs. Western Asset Municipal | Fidelity Trafund vs. Arrow Managed Futures | Fidelity Trafund vs. Aam Select Income |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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