Correlation Between Franklin Federal and Fidelity Sai

Can any of the company-specific risk be diversified away by investing in both Franklin Federal and Fidelity Sai 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 Sai 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 Sai Short Term, you can compare the effects of market volatilities on Franklin Federal and Fidelity Sai 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 Sai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Federal and Fidelity Sai.

Diversification Opportunities for Franklin Federal and Fidelity Sai

0.67

Correlation Coefficient

Franklin Federal  Fidelity Sai

Poor diversification

The 3 months correlation between Franklin and Fidelity is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Federal Limited Term and Fidelity Sai Short Term in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Sai Short 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 Sai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Sai Short has no effect on the direction of Franklin Federal i.e., Franklin Federal and Fidelity Sai go up and down completely randomly.

Pair Corralation between Franklin Federal and Fidelity Sai

Assuming the 90 days horizon Franklin Federal is expected to generate 1.29 times less return on investment than Fidelity Sai. But when comparing it to its historical volatility, Franklin Federal Limited Term is 1.38 times less risky than Fidelity Sai. It trades about 0.12 of its potential returns per unit of risk. Fidelity Sai Short Term is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  890.00  in Fidelity Sai Short Term on September 29, 2024 and sell it today you would earn a total of  77.00  from holding Fidelity Sai Short Term or generate 8.65% return on investment over 90 days.

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

Franklin Federal Limited Term  vs.  Fidelity Sai Short Term

Franklin Federal Lim

Risk-Adjusted Performance

0 of 100

Very Weak

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

Fidelity Sai Short

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fidelity Sai Short Term has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong primary indicators, Fidelity Sai 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 Federal and Fidelity Sai

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

The idea behind Franklin Federal Limited Term and Fidelity Sai Short Term 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.