Correlation Between Western Asset and Fidelity New
Can any of the company-specific risk be diversified away by investing in both Western Asset and Fidelity New 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 New 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 New Markets, you can compare the effects of market volatilities on Western Asset and Fidelity New 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 New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Fidelity New.
Diversification Opportunities for Western Asset and Fidelity New
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Western and Fidelity is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Municipal and Fidelity New Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity New Markets 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 New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity New Markets has no effect on the direction of Western Asset i.e., Western Asset and Fidelity New go up and down completely randomly.
Pair Corralation between Western Asset and Fidelity New
Assuming the 90 days horizon Western Asset Municipal is expected to under-perform the Fidelity New. But the mutual fund apears to be less risky and, when comparing its historical volatility, Western Asset Municipal is 1.07 times less risky than Fidelity New. The mutual fund trades about -0.05 of its potential returns per unit of risk. The Fidelity New Markets is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,272 in Fidelity New Markets on August 31, 2024 and sell it today you would earn a total of 12.00 from holding Fidelity New Markets or generate 0.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Municipal vs. Fidelity New Markets
Performance |
| Timeline |
| Western Asset Municipal |
| Fidelity New Markets |
Western Asset and Fidelity New Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Fidelity New
The main advantage of trading using opposite Western Asset and Fidelity New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Fidelity New 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 New will offset losses from the drop in Fidelity New's long position.| Western Asset vs. T Rowe Price | Western Asset vs. California Bond Fund | Western Asset vs. Blrc Sgy Mnp | Western Asset vs. Legg Mason Partners |
| Fidelity New vs. Fidelity New Markets | Fidelity New vs. Fidelity New Markets | Fidelity New vs. Mfs Emerging Markets | Fidelity New vs. Mfs Emerging Markets |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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