Correlation Between Franklin Federal and Fidelity Advisor
Can any of the company-specific risk be diversified away by investing in both Franklin Federal and Fidelity Advisor 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 Federal and Fidelity Advisor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Federal Limited Term and Fidelity Advisor Freedom, you can compare the effects of market volatilities on Franklin Federal and Fidelity Advisor 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 Federal with a short position of Fidelity Advisor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Federal and Fidelity Advisor.
Diversification Opportunities for Franklin Federal and Fidelity Advisor
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Franklin and Fidelity is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Federal Limited Term and Fidelity Advisor Freedom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Advisor Freedom and Franklin Federal 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 Federal Limited Term are associated (or correlated) with Fidelity Advisor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Advisor Freedom has no effect on the direction of Franklin Federal i.e., Franklin Federal and Fidelity Advisor go up and down completely randomly.
Pair Corralation between Franklin Federal and Fidelity Advisor
Assuming the 90 days horizon Franklin Federal is expected to generate 6.06 times less return on investment than Fidelity Advisor. But when comparing it to its historical volatility, Franklin Federal Limited Term is 4.85 times less risky than Fidelity Advisor. It trades about 0.19 of its potential returns per unit of risk. Fidelity Advisor Freedom is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 1,387 in Fidelity Advisor Freedom on September 1, 2024 and sell it today you would earn a total of 43.00 from holding Fidelity Advisor Freedom or generate 3.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Franklin Federal Limited Term vs. Fidelity Advisor Freedom
Performance |
| Timeline |
| Franklin Federal Lim |
| Fidelity Advisor Freedom |
Franklin Federal and Fidelity Advisor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Federal and Fidelity Advisor
The main advantage of trading using opposite Franklin Federal and Fidelity Advisor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Federal position performs unexpectedly, Fidelity Advisor 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 Advisor will offset losses from the drop in Fidelity Advisor's long position.| Franklin Federal vs. Small Midcap Dividend Income | Franklin Federal vs. Tax Managed Mid Small | Franklin Federal vs. Touchstone Small Cap | Franklin Federal vs. Jpmorgan Small Cap |
| Fidelity Advisor vs. Maryland Short Term Tax Free | Fidelity Advisor vs. Federated Ultrashort Bond | Fidelity Advisor vs. Ultra Short Fixed Income | Fidelity Advisor vs. Franklin Federal Limited Term |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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