Correlation Between Fidelity International and Franklin International
Can any of the company-specific risk be diversified away by investing in both Fidelity International and Franklin International 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 International and Franklin International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity International Growth and Franklin International Growth, you can compare the effects of market volatilities on Fidelity International and Franklin International 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 International with a short position of Franklin International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity International and Franklin International.
Diversification Opportunities for Fidelity International and Franklin International
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Fidelity and Franklin is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity International Growth and Franklin International Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin International and Fidelity International 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 International Growth are associated (or correlated) with Franklin International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin International has no effect on the direction of Fidelity International i.e., Fidelity International and Franklin International go up and down completely randomly.
Pair Corralation between Fidelity International and Franklin International
Assuming the 90 days horizon Fidelity International Growth is expected to generate 0.97 times more return on investment than Franklin International. However, Fidelity International Growth is 1.04 times less risky than Franklin International. It trades about 0.01 of its potential returns per unit of risk. Franklin International Growth is currently generating about -0.01 per unit of risk. If you would invest 2,093 in Fidelity International Growth on September 12, 2024 and sell it today you would earn a total of 1.00 from holding Fidelity International Growth or generate 0.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity International Growth vs. Franklin International Growth
Performance |
| Timeline |
| Fidelity International |
| Franklin International |
Fidelity International and Franklin International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity International and Franklin International
The main advantage of trading using opposite Fidelity International and Franklin International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity International position performs unexpectedly, Franklin International 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 International will offset losses from the drop in Franklin International's long position.The idea behind Fidelity International Growth and Franklin International Growth 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.
| Franklin International vs. Franklin Dynatech Fund | Franklin International vs. Franklin Growth Fund | Franklin International vs. Franklin Rising Dividends | Franklin International vs. Franklin Small 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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