Correlation Between Franklin Natural and Fidelity Freedom
Can any of the company-specific risk be diversified away by investing in both Franklin Natural 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 Natural 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 Natural Resources and Fidelity Freedom 2030, you can compare the effects of market volatilities on Franklin Natural 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 Natural with a short position of Fidelity Freedom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Natural and Fidelity Freedom.
Diversification Opportunities for Franklin Natural and Fidelity Freedom
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Franklin and Fidelity is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Natural Resources and Fidelity Freedom 2030 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Freedom 2030 and Franklin Natural 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 Natural Resources 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 2030 has no effect on the direction of Franklin Natural i.e., Franklin Natural and Fidelity Freedom go up and down completely randomly.
Pair Corralation between Franklin Natural and Fidelity Freedom
Assuming the 90 days horizon Franklin Natural is expected to generate 2.26 times less return on investment than Fidelity Freedom. In addition to that, Franklin Natural is 1.95 times more volatile than Fidelity Freedom 2030. It trades about 0.03 of its total potential returns per unit of risk. Fidelity Freedom 2030 is currently generating about 0.11 per unit of volatility. If you would invest 1,524 in Fidelity Freedom 2030 on September 12, 2024 and sell it today you would earn a total of 327.00 from holding Fidelity Freedom 2030 or generate 21.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Natural Resources vs. Fidelity Freedom 2030
Performance |
| Timeline |
| Franklin Natural Res |
| Fidelity Freedom 2030 |
Franklin Natural and Fidelity Freedom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Natural and Fidelity Freedom
The main advantage of trading using opposite Franklin Natural and Fidelity Freedom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Natural 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 Natural vs. Victory Rs Partners | Franklin Natural vs. Queens Road Small | Franklin Natural vs. Royce Opportunity Fund | Franklin Natural vs. Pace Smallmedium Value |
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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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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