Correlation Between Franklin Real and Fidelity Freedom
Can any of the company-specific risk be diversified away by investing in both Franklin Real and Fidelity Freedom 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 Real and Fidelity Freedom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Real Estate and Fidelity Freedom Index, you can compare the effects of market volatilities on Franklin Real and Fidelity Freedom 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 Real with a short position of Fidelity Freedom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Real and Fidelity Freedom.
Diversification Opportunities for Franklin Real and Fidelity Freedom
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Franklin and Fidelity is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Real Estate and Fidelity Freedom Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Freedom Index and Franklin Real 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 Real Estate are associated (or correlated) with Fidelity Freedom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Freedom Index has no effect on the direction of Franklin Real i.e., Franklin Real and Fidelity Freedom go up and down completely randomly.
Pair Corralation between Franklin Real and Fidelity Freedom
Assuming the 90 days horizon Franklin Real is expected to generate 1.95 times less return on investment than Fidelity Freedom. In addition to that, Franklin Real is 1.62 times more volatile than Fidelity Freedom Index. It trades about 0.03 of its total potential returns per unit of risk. Fidelity Freedom Index is currently generating about 0.09 per unit of volatility. If you would invest 1,974 in Fidelity Freedom Index on August 30, 2024 and sell it today you would earn a total of 735.00 from holding Fidelity Freedom Index or generate 37.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Real Estate vs. Fidelity Freedom Index
Performance |
| Timeline |
| Franklin Real Estate |
| Fidelity Freedom Index |
Franklin Real and Fidelity Freedom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Real and Fidelity Freedom
The main advantage of trading using opposite Franklin Real and Fidelity Freedom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Real position performs unexpectedly, Fidelity Freedom 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 Freedom will offset losses from the drop in Fidelity Freedom's long position.| Franklin Real vs. Franklin Natural Resources | Franklin Real vs. HUMANA INC | Franklin Real vs. Aquagold International | Franklin Real vs. Barloworld Ltd ADR |
| Fidelity Freedom vs. Goldman Sachs Inflation | Fidelity Freedom vs. Aqr Managed Futures | Fidelity Freedom vs. Ab Bond Inflation | Fidelity Freedom vs. Ab Bond Inflation |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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