Correlation Between Fidelity Freedom and Franklin Lifesmart
Can any of the company-specific risk be diversified away by investing in both Fidelity Freedom and Franklin Lifesmart 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 Freedom and Franklin Lifesmart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Freedom 2060 and Franklin Lifesmart 2060, you can compare the effects of market volatilities on Fidelity Freedom and Franklin Lifesmart 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 Freedom with a short position of Franklin Lifesmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Freedom and Franklin Lifesmart.
Diversification Opportunities for Fidelity Freedom and Franklin Lifesmart
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Fidelity and Franklin is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Freedom 2060 and Franklin Lifesmart 2060 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Lifesmart 2060 and Fidelity Freedom 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 Freedom 2060 are associated (or correlated) with Franklin Lifesmart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Lifesmart 2060 has no effect on the direction of Fidelity Freedom i.e., Fidelity Freedom and Franklin Lifesmart go up and down completely randomly.
Pair Corralation between Fidelity Freedom and Franklin Lifesmart
Assuming the 90 days horizon Fidelity Freedom 2060 is expected to generate 0.99 times more return on investment than Franklin Lifesmart. However, Fidelity Freedom 2060 is 1.01 times less risky than Franklin Lifesmart. It trades about 0.09 of its potential returns per unit of risk. Franklin Lifesmart 2060 is currently generating about 0.09 per unit of risk. If you would invest 1,200 in Fidelity Freedom 2060 on September 2, 2024 and sell it today you would earn a total of 325.00 from holding Fidelity Freedom 2060 or generate 27.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Freedom 2060 vs. Franklin Lifesmart 2060
Performance |
| Timeline |
| Fidelity Freedom 2060 |
| Franklin Lifesmart 2060 |
Fidelity Freedom and Franklin Lifesmart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Freedom and Franklin Lifesmart
The main advantage of trading using opposite Fidelity Freedom and Franklin Lifesmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Freedom position performs unexpectedly, Franklin Lifesmart 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 Franklin Lifesmart will offset losses from the drop in Franklin Lifesmart's long position.| Fidelity Freedom vs. Fidelity Freedom 2055 | Fidelity Freedom vs. Fidelity Freedom 2050 | Fidelity Freedom vs. Fidelity Freedom 2065 | Fidelity Freedom vs. Fidelity Freedom 2045 |
| Franklin Lifesmart vs. Franklin Mutual Beacon | Franklin Lifesmart vs. Templeton Developing Markets | Franklin Lifesmart vs. Franklin Mutual Global | Franklin Lifesmart vs. Franklin Mutual Global |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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