Correlation Between Fidelity Flex and Franklin Federal
Can any of the company-specific risk be diversified away by investing in both Fidelity Flex and Franklin Federal 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 Flex and Franklin Federal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Flex Servative and Franklin Federal Tax Free, you can compare the effects of market volatilities on Fidelity Flex and Franklin Federal 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 Flex with a short position of Franklin Federal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Flex and Franklin Federal.
Diversification Opportunities for Fidelity Flex and Franklin Federal
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Fidelity and Franklin is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Flex Servative and Franklin Federal Tax Free in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Federal Tax and Fidelity Flex 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 Flex Servative are associated (or correlated) with Franklin Federal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Federal Tax has no effect on the direction of Fidelity Flex i.e., Fidelity Flex and Franklin Federal go up and down completely randomly.
Pair Corralation between Fidelity Flex and Franklin Federal
Assuming the 90 days horizon Fidelity Flex Servative is expected to generate 0.17 times more return on investment than Franklin Federal. However, Fidelity Flex Servative is 6.01 times less risky than Franklin Federal. It trades about 0.13 of its potential returns per unit of risk. Franklin Federal Tax Free is currently generating about -0.06 per unit of risk. If you would invest 1,002 in Fidelity Flex Servative on November 4, 2024 and sell it today you would earn a total of 1.00 from holding Fidelity Flex Servative or generate 0.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Flex Servative vs. Franklin Federal Tax Free
Performance |
| Timeline |
| Fidelity Flex Servative |
| Franklin Federal Tax |
Fidelity Flex and Franklin Federal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Flex and Franklin Federal
The main advantage of trading using opposite Fidelity Flex and Franklin Federal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Flex position performs unexpectedly, Franklin Federal 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 Federal will offset losses from the drop in Franklin Federal's long position.| Fidelity Flex vs. Touchstone Large Cap | Fidelity Flex vs. Vest Large Cap | Fidelity Flex vs. Oakmark Fund Investor | Fidelity Flex vs. Calvert Large Cap |
| Franklin Federal vs. Americafirst Large Cap | Franklin Federal vs. Qs Large Cap | Franklin Federal vs. Ab Large Cap | Franklin Federal vs. Transamerica Large Cap |
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 Stocks Directory module to find actively traded stocks across global markets.
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