Correlation Between Western Asset and Fidelity Advisor
Can any of the company-specific risk be diversified away by investing in both Western Asset and Fidelity Advisor 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 Advisor 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 Advisor Financial, you can compare the effects of market volatilities on Western Asset and Fidelity Advisor 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 Advisor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Fidelity Advisor.
Diversification Opportunities for Western Asset and Fidelity Advisor
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Western and Fidelity is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Diversified and Fidelity Advisor Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Advisor Fin 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 Advisor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Advisor Fin has no effect on the direction of Western Asset i.e., Western Asset and Fidelity Advisor go up and down completely randomly.
Pair Corralation between Western Asset and Fidelity Advisor
Assuming the 90 days horizon Western Asset Diversified is expected to under-perform the Fidelity Advisor. But the mutual fund apears to be less risky and, when comparing its historical volatility, Western Asset Diversified is 3.27 times less risky than Fidelity Advisor. The mutual fund trades about -0.01 of its potential returns per unit of risk. The Fidelity Advisor Financial is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 2,691 in Fidelity Advisor Financial on November 7, 2024 and sell it today you would earn a total of 1,163 from holding Fidelity Advisor Financial or generate 43.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Diversified vs. Fidelity Advisor Financial
Performance |
| Timeline |
| Western Asset Diversified |
| Fidelity Advisor Fin |
Western Asset and Fidelity Advisor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Fidelity Advisor
The main advantage of trading using opposite Western Asset and Fidelity Advisor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Fidelity Advisor 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 Advisor will offset losses from the drop in Fidelity Advisor's long position.| Western Asset vs. Advent Claymore Convertible | Western Asset vs. Putnam Convertible Securities | Western Asset vs. Virtus Convertible | Western Asset vs. Columbia Convertible Securities |
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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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