Correlation Between Franklin Government and Fidelity Freedom
Can any of the company-specific risk be diversified away by investing in both Franklin Government 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 Government 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 Government Money and Fidelity Freedom 2045, you can compare the effects of market volatilities on Franklin Government 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 Government with a short position of Fidelity Freedom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Government and Fidelity Freedom.
Diversification Opportunities for Franklin Government and Fidelity Freedom
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Franklin and Fidelity is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Government Money and Fidelity Freedom 2045 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Freedom 2045 and Franklin Government 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 Government Money 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 2045 has no effect on the direction of Franklin Government i.e., Franklin Government and Fidelity Freedom go up and down completely randomly.
Pair Corralation between Franklin Government and Fidelity Freedom
If you would invest 1,405 in Fidelity Freedom 2045 on September 13, 2024 and sell it today you would earn a total of 24.00 from holding Fidelity Freedom 2045 or generate 1.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Government Money vs. Fidelity Freedom 2045
Performance |
| Timeline |
| Franklin Government Money |
| Fidelity Freedom 2045 |
Franklin Government and Fidelity Freedom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Government and Fidelity Freedom
The main advantage of trading using opposite Franklin Government and Fidelity Freedom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Government 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 Government vs. Jpmorgan High Yield | Franklin Government vs. Janus High Yield Fund | Franklin Government vs. Gmo High Yield | Franklin Government vs. Guggenheim High Yield |
| Fidelity Freedom vs. Qs Moderate Growth | Fidelity Freedom vs. Qs Defensive Growth | Fidelity Freedom vs. Champlain Mid Cap | Fidelity Freedom vs. Chase Growth Fund |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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