Correlation Between Franklin FTSE and Fidelity Sustainable

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

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

Diversification Opportunities for Franklin FTSE and Fidelity Sustainable

-0.3

Correlation Coefficient

Franklin FTSE  Fidelity Sustainable

Very good diversification

The 3 months correlation between Franklin and Fidelity is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Franklin FTSE Brazil and Fidelity Sustainable Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Sustainable and Franklin FTSE 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 FTSE Brazil are associated (or correlated) with Fidelity Sustainable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Sustainable has no effect on the direction of Franklin FTSE i.e., Franklin FTSE and Fidelity Sustainable go up and down completely randomly.

Pair Corralation between Franklin FTSE and Fidelity Sustainable

Assuming the 90 days trading horizon Franklin FTSE Brazil is expected to under-perform the Fidelity Sustainable. But the etf apears to be less risky and, when comparing its historical volatility, Franklin FTSE Brazil is 306.39 times less risky than Fidelity Sustainable. The etf trades about -0.12 of its potential returns per unit of risk. The Fidelity Sustainable Global is currently generating about 0.41 of returns per unit of risk over similar time horizon. If you would invest  41,260  in Fidelity Sustainable Global on September 16, 2024 and sell it today you would earn a total of  700.00  from holding Fidelity Sustainable Global or generate 1.7% return on investment over 90 days.

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

Franklin FTSE Brazil  vs.  Fidelity Sustainable Global

Franklin FTSE Brazil

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Franklin FTSE Brazil has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Etf's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the exchange-traded fund private investors.

Fidelity Sustainable

Risk-Adjusted Performance

32 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Sustainable Global are ranked lower than 32 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Fidelity Sustainable unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Franklin FTSE and Fidelity Sustainable

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

The idea behind Franklin FTSE Brazil and Fidelity Sustainable Global 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.