Correlation Between Fidelity Small and Franklin International
Can any of the company-specific risk be diversified away by investing in both Fidelity Small and Franklin International 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 Small and Franklin International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Small Cap and Franklin International Growth, you can compare the effects of market volatilities on Fidelity Small and Franklin International 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 Small with a short position of Franklin International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Small and Franklin International.
Diversification Opportunities for Fidelity Small and Franklin International
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Fidelity and Franklin is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Small Cap and Franklin International Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin International and Fidelity 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 Fidelity Small Cap are associated (or correlated) with Franklin International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin International has no effect on the direction of Fidelity Small i.e., Fidelity Small and Franklin International go up and down completely randomly.
Pair Corralation between Fidelity Small and Franklin International
Assuming the 90 days horizon Fidelity Small Cap is expected to generate 1.09 times more return on investment than Franklin International. However, Fidelity Small is 1.09 times more volatile than Franklin International Growth. It trades about 0.07 of its potential returns per unit of risk. Franklin International Growth is currently generating about 0.03 per unit of risk. If you would invest 2,453 in Fidelity Small Cap on September 4, 2024 and sell it today you would earn a total of 1,233 from holding Fidelity Small Cap or generate 50.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Small Cap vs. Franklin International Growth
Performance |
| Timeline |
| Fidelity Small Cap |
| Franklin International |
Fidelity Small and Franklin International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Small and Franklin International
The main advantage of trading using opposite Fidelity Small and Franklin International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Small position performs unexpectedly, Franklin International 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 International will offset losses from the drop in Franklin International's long position.| Fidelity Small vs. Fidelity Small Cap | Fidelity Small vs. Fidelity Small Cap | Fidelity Small vs. Fidelity Small Cap | Fidelity Small vs. Fidelity Small Cap |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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