Correlation Between Western Asset and Fidelity Total
Can any of the company-specific risk be diversified away by investing in both Western Asset and Fidelity Total 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 Total into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Diversified and Fidelity Total Bond, you can compare the effects of market volatilities on Western Asset and Fidelity Total 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 Total. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Fidelity Total.
Diversification Opportunities for Western Asset and Fidelity Total
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Western and Fidelity is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Diversified and Fidelity Total Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Total Bond 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 Diversified are associated (or correlated) with Fidelity Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Total Bond has no effect on the direction of Western Asset i.e., Western Asset and Fidelity Total go up and down completely randomly.
Pair Corralation between Western Asset and Fidelity Total
Assuming the 90 days horizon Western Asset is expected to generate 1.54 times less return on investment than Fidelity Total. But when comparing it to its historical volatility, Western Asset Diversified is 1.14 times less risky than Fidelity Total. It trades about 0.08 of its potential returns per unit of risk. Fidelity Total Bond is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 953.00 in Fidelity Total Bond on September 5, 2024 and sell it today you would earn a total of 7.00 from holding Fidelity Total Bond or generate 0.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Western Asset Diversified vs. Fidelity Total Bond
Performance |
| Timeline |
| Western Asset Diversified |
| Fidelity Total Bond |
Western Asset and Fidelity Total Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Fidelity Total
The main advantage of trading using opposite Western Asset and Fidelity Total positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Fidelity Total 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 Total will offset losses from the drop in Fidelity Total's long position.| Western Asset vs. Vanguard Total Stock | Western Asset vs. Vanguard 500 Index | Western Asset vs. Vanguard Total Stock | Western Asset vs. Vanguard Total Stock |
| Fidelity Total vs. Fidelity Freedom 2015 | Fidelity Total vs. Fidelity Puritan Fund | Fidelity Total vs. Fidelity Puritan Fund | Fidelity Total vs. Fidelity Pennsylvania Municipal |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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