Correlation Between Fidelity Advisor and Franklin Strategic

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Can any of the company-specific risk be diversified away by investing in both Fidelity Advisor and Franklin Strategic 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 Advisor and Franklin Strategic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Advisor Diversified and Franklin Strategic Income, you can compare the effects of market volatilities on Fidelity Advisor and Franklin Strategic 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 Advisor with a short position of Franklin Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Advisor and Franklin Strategic.

Diversification Opportunities for Fidelity Advisor and Franklin Strategic

0.78
  Correlation Coefficient

Poor diversification

The 3 months correlation between Fidelity and Franklin is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Advisor Diversified and Franklin Strategic Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Strategic Income and Fidelity Advisor 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 Advisor Diversified are associated (or correlated) with Franklin Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Strategic Income has no effect on the direction of Fidelity Advisor i.e., Fidelity Advisor and Franklin Strategic go up and down completely randomly.

Pair Corralation between Fidelity Advisor and Franklin Strategic

Assuming the 90 days horizon Fidelity Advisor Diversified is expected to generate 3.43 times more return on investment than Franklin Strategic. However, Fidelity Advisor is 3.43 times more volatile than Franklin Strategic Income. It trades about 0.14 of its potential returns per unit of risk. Franklin Strategic Income is currently generating about 0.21 per unit of risk. If you would invest  2,766  in Fidelity Advisor Diversified on September 13, 2024 and sell it today you would earn a total of  51.00  from holding Fidelity Advisor Diversified or generate 1.84% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Fidelity Advisor Diversified  vs.  Franklin Strategic Income

 Performance 
       Timeline  
Fidelity Advisor Div 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Fidelity Advisor Diversified has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental drivers, Fidelity Advisor is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Franklin Strategic Income 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Franklin Strategic Income has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Franklin Strategic is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Fidelity Advisor and Franklin Strategic Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Fidelity Advisor and Franklin Strategic

The main advantage of trading using opposite Fidelity Advisor and Franklin Strategic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Advisor position performs unexpectedly, Franklin Strategic 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 Strategic will offset losses from the drop in Franklin Strategic's long position.
The idea behind Fidelity Advisor Diversified and Franklin Strategic Income pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.

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