Correlation Between Fidelity Advisor and Legg Mason

Can any of the company-specific risk be diversified away by investing in both Fidelity Advisor and Legg Mason 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 Fidelity Advisor and Legg Mason into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Fidelity Advisor Health and Legg Mason Global, you can compare the effects of market volatilities on Fidelity Advisor and Legg Mason 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 Fidelity Advisor with a short position of Legg Mason. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Advisor and Legg Mason.

Diversification Opportunities for Fidelity Advisor and Legg Mason

0.06

Correlation Coefficient

Fidelity Advisor  Legg Mason

Significant diversification

The 3 months correlation between Fidelity and Legg is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Advisor Health and Legg Mason Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Legg Mason Global and Fidelity Advisor 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 Fidelity Advisor Health are associated (or correlated) with Legg Mason. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Legg Mason Global has no effect on the direction of Fidelity Advisor i.e., Fidelity Advisor and Legg Mason go up and down completely randomly.

Pair Corralation between Fidelity Advisor and Legg Mason

Assuming the 90 days horizon Fidelity Advisor is expected to generate 1.12 times less return on investment than Legg Mason. In addition to that, Fidelity Advisor is 4.04 times more volatile than Legg Mason Global. It trades about 0.06 of its total potential returns per unit of risk. Legg Mason Global is currently generating about 0.27 per unit of volatility. If you would invest  915.00  in Legg Mason Global on December 2, 2024 and sell it today you would earn a total of  22.00  from holding Legg Mason Global or generate 2.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Fidelity Advisor Health  vs.  Legg Mason Global

Fidelity Advisor Health

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fidelity Advisor Health has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Legg Mason Global

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Legg Mason Global are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Legg Mason is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Fidelity Advisor and Legg Mason

The main advantage of trading using opposite Fidelity Advisor and Legg Mason positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Advisor position performs unexpectedly, Legg Mason 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 Legg Mason will offset losses from the drop in Legg Mason's long position.

The idea behind Fidelity Advisor Health and Legg Mason Global pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.