Correlation Between Fidelity Freedom and Franklin Lifesmart
Can any of the company-specific risk be diversified away by investing in both Fidelity Freedom and Franklin Lifesmart 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 Lifesmart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Freedom 2030 and Franklin Lifesmart 2030, you can compare the effects of market volatilities on Fidelity Freedom and Franklin Lifesmart 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 Lifesmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Freedom and Franklin Lifesmart.
Diversification Opportunities for Fidelity Freedom and Franklin Lifesmart
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fidelity and Franklin is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Freedom 2030 and Franklin Lifesmart 2030 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Lifesmart 2030 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 2030 are associated (or correlated) with Franklin Lifesmart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Lifesmart 2030 has no effect on the direction of Fidelity Freedom i.e., Fidelity Freedom and Franklin Lifesmart go up and down completely randomly.
Pair Corralation between Fidelity Freedom and Franklin Lifesmart
Assuming the 90 days horizon Fidelity Freedom is expected to generate 1.27 times less return on investment than Franklin Lifesmart. In addition to that, Fidelity Freedom is 1.03 times more volatile than Franklin Lifesmart 2030. It trades about 0.06 of its total potential returns per unit of risk. Franklin Lifesmart 2030 is currently generating about 0.08 per unit of volatility. If you would invest 1,136 in Franklin Lifesmart 2030 on October 9, 2024 and sell it today you would earn a total of 267.00 from holding Franklin Lifesmart 2030 or generate 23.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Freedom 2030 vs. Franklin Lifesmart 2030
Performance |
| Timeline |
| Fidelity Freedom 2030 |
| Franklin Lifesmart 2030 |
Fidelity Freedom and Franklin Lifesmart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Freedom and Franklin Lifesmart
The main advantage of trading using opposite Fidelity Freedom and Franklin Lifesmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Freedom position performs unexpectedly, Franklin Lifesmart 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 Lifesmart will offset losses from the drop in Franklin Lifesmart's long position.| Fidelity Freedom vs. Blrc Sgy Mnp | Fidelity Freedom vs. Franklin Government Money | Fidelity Freedom vs. Leader Short Term Bond | Fidelity Freedom vs. Metropolitan West Porate |
| Franklin Lifesmart vs. Franklin Mutual Beacon | Franklin Lifesmart vs. Templeton Developing Markets | Franklin Lifesmart vs. Franklin Mutual Global | Franklin Lifesmart vs. Franklin Mutual Global |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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