Correlation Between Fidelity Sai and Legg Mason

Can any of the company-specific risk be diversified away by investing in both Fidelity Sai 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 Sai 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 Sai Convertible and Legg Mason Partners, you can compare the effects of market volatilities on Fidelity Sai 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 Sai with a short position of Legg Mason. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Sai and Legg Mason.

Diversification Opportunities for Fidelity Sai and Legg Mason

0.0

Correlation Coefficient

Fidelity Sai  Legg Mason

Pay attention - limited upside

The 3 months correlation between Fidelity and Legg is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Sai Convertible and Legg Mason Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Legg Mason Partners and Fidelity Sai 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 Sai Convertible 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 Partners has no effect on the direction of Fidelity Sai i.e., Fidelity Sai and Legg Mason go up and down completely randomly.

Pair Corralation between Fidelity Sai and Legg Mason

Assuming the 90 days horizon Fidelity Sai Convertible is expected to generate 0.81 times more return on investment than Legg Mason. However, Fidelity Sai Convertible is 1.23 times less risky than Legg Mason. It trades about 0.34 of its potential returns per unit of risk. Legg Mason Partners is currently generating about 0.13 per unit of risk. If you would invest  940.00  in Fidelity Sai Convertible on December 2, 2024 and sell it today you would earn a total of  136.00  from holding Fidelity Sai Convertible or generate 14.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	74.55%
Values	Daily Returns

Fidelity Sai Convertible  vs.  Legg Mason Partners

Fidelity Sai Convertible

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Sai Convertible are ranked lower than 35 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Fidelity Sai is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Legg Mason Partners

Risk-Adjusted Performance

Very Weak

Over the last 90 days Legg Mason Partners has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic 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 Sai and Legg Mason

The main advantage of trading using opposite Fidelity Sai and Legg Mason positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Sai 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 Sai Convertible and Legg Mason Partners 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.

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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.