Correlation Between Franklin Templeton and Fidelity Freedom

Can any of the company-specific risk be diversified away by investing in both Franklin Templeton and Fidelity Freedom 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 Templeton and Fidelity Freedom into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Franklin Templeton Limited and Fidelity Freedom Income, you can compare the effects of market volatilities on Franklin Templeton and Fidelity Freedom 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 Templeton with a short position of Fidelity Freedom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Templeton and Fidelity Freedom.

Diversification Opportunities for Franklin Templeton and Fidelity Freedom

0.64

Correlation Coefficient

Franklin Templeton  Fidelity Freedom

Poor diversification

The 3 months correlation between Franklin and Fidelity is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Templeton Limited and Fidelity Freedom Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Freedom Income and Franklin Templeton 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 Templeton Limited are associated (or correlated) with Fidelity Freedom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Freedom Income has no effect on the direction of Franklin Templeton i.e., Franklin Templeton and Fidelity Freedom go up and down completely randomly.

Pair Corralation between Franklin Templeton and Fidelity Freedom

Considering the 90-day investment horizon Franklin Templeton Limited is expected to generate 1.68 times more return on investment than Fidelity Freedom. However, Franklin Templeton is 1.68 times more volatile than Fidelity Freedom Income. It trades about 0.08 of its potential returns per unit of risk. Fidelity Freedom Income is currently generating about 0.05 per unit of risk. If you would invest  650.00  in Franklin Templeton Limited on September 3, 2024 and sell it today you would earn a total of  14.00  from holding Franklin Templeton Limited or generate 2.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Franklin Templeton Limited  vs.  Fidelity Freedom Income

Franklin Templeton

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Templeton Limited are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Franklin Templeton is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Fidelity Freedom Income

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Freedom Income are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Fidelity Freedom is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Franklin Templeton and Fidelity Freedom

The main advantage of trading using opposite Franklin Templeton and Fidelity Freedom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Templeton position performs unexpectedly, Fidelity Freedom 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 Freedom will offset losses from the drop in Fidelity Freedom's long position.

The idea behind Franklin Templeton Limited and Fidelity Freedom 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.

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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.