Correlation Between Fidelity Freedom and Franklin Templeton
Can any of the company-specific risk be diversified away by investing in both Fidelity Freedom and Franklin Templeton 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 Templeton into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Freedom Index and Franklin Templeton Limited, you can compare the effects of market volatilities on Fidelity Freedom and Franklin Templeton 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 Templeton. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Freedom and Franklin Templeton.
Diversification Opportunities for Fidelity Freedom and Franklin Templeton
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fidelity and Franklin is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Freedom Index and Franklin Templeton Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Templeton 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 Index are associated (or correlated) with Franklin Templeton. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Templeton has no effect on the direction of Fidelity Freedom i.e., Fidelity Freedom and Franklin Templeton go up and down completely randomly.
Pair Corralation between Fidelity Freedom and Franklin Templeton
Assuming the 90 days horizon Fidelity Freedom is expected to generate 1.18 times less return on investment than Franklin Templeton. But when comparing it to its historical volatility, Fidelity Freedom Index is 1.35 times less risky than Franklin Templeton. It trades about 0.12 of its potential returns per unit of risk. Franklin Templeton Limited is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 566.00 in Franklin Templeton Limited on August 27, 2024 and sell it today you would earn a total of 94.00 from holding Franklin Templeton Limited or generate 16.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Freedom Index vs. Franklin Templeton Limited
Performance |
| Timeline |
| Fidelity Freedom Index |
| Franklin Templeton |
Fidelity Freedom and Franklin Templeton Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Freedom and Franklin Templeton
The main advantage of trading using opposite Fidelity Freedom and Franklin Templeton positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Freedom position performs unexpectedly, Franklin Templeton 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 Templeton will offset losses from the drop in Franklin Templeton's long position.| Fidelity Freedom vs. Fidelity Freedom Index | Fidelity Freedom vs. Fidelity Freedom Index | Fidelity Freedom vs. Fidelity Freedom Index | Fidelity Freedom vs. Fidelity Freedom Index |
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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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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