Correlation Between Franklin Small and Fidelity Puritan
Can any of the company-specific risk be diversified away by investing in both Franklin Small and Fidelity Puritan 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 Franklin Small and Fidelity Puritan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Small Cap and Fidelity Puritan Fund, you can compare the effects of market volatilities on Franklin Small and Fidelity Puritan 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 Franklin Small with a short position of Fidelity Puritan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Small and Fidelity Puritan.
Diversification Opportunities for Franklin Small and Fidelity Puritan
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Franklin and Fidelity is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Small Cap and Fidelity Puritan Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Puritan and Franklin Small 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 Franklin Small Cap are associated (or correlated) with Fidelity Puritan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Puritan has no effect on the direction of Franklin Small i.e., Franklin Small and Fidelity Puritan go up and down completely randomly.
Pair Corralation between Franklin Small and Fidelity Puritan
Assuming the 90 days horizon Franklin Small Cap is expected to generate 1.55 times more return on investment than Fidelity Puritan. However, Franklin Small is 1.55 times more volatile than Fidelity Puritan Fund. It trades about 0.08 of its potential returns per unit of risk. Fidelity Puritan Fund is currently generating about 0.07 per unit of risk. If you would invest 1,300 in Franklin Small Cap on November 5, 2024 and sell it today you would earn a total of 380.00 from holding Franklin Small Cap or generate 29.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Small Cap vs. Fidelity Puritan Fund
Performance |
| Timeline |
| Franklin Small Cap |
| Fidelity Puritan |
Franklin Small and Fidelity Puritan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Small and Fidelity Puritan
The main advantage of trading using opposite Franklin Small and Fidelity Puritan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Small position performs unexpectedly, Fidelity Puritan 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 Puritan will offset losses from the drop in Fidelity Puritan's long position.| Franklin Small vs. Federated Hermes Conservative | Franklin Small vs. Jpmorgan Diversified Fund | Franklin Small vs. Wilmington Diversified Income | Franklin Small vs. Fulcrum Diversified Absolute |
| Fidelity Puritan vs. Lord Abbett Government | Fidelity Puritan vs. Virtus Seix Government | Fidelity Puritan vs. Us Government Securities | Fidelity Puritan vs. Voya Government Money |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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