Correlation Between Franklin International and Fidelity High

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

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

Diversification Opportunities for Franklin International and Fidelity High

0.33

Correlation Coefficient

Franklin International  Fidelity High

Weak diversification

The 3 months correlation between Franklin and Fidelity is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Franklin International Core and Fidelity High Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity High Dividend and Franklin 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 Franklin International Core are associated (or correlated) with Fidelity High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity High Dividend has no effect on the direction of Franklin International i.e., Franklin International and Fidelity High go up and down completely randomly.

Pair Corralation between Franklin International and Fidelity High

Given the investment horizon of 90 days Franklin International is expected to generate 2.68 times less return on investment than Fidelity High. In addition to that, Franklin International is 1.2 times more volatile than Fidelity High Dividend. It trades about 0.04 of its total potential returns per unit of risk. Fidelity High Dividend is currently generating about 0.12 per unit of volatility. If you would invest  3,787  in Fidelity High Dividend on October 22, 2024 and sell it today you would earn a total of  1,301  from holding Fidelity High Dividend or generate 34.35% return on investment over 90 days.

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

Franklin International Core  vs.  Fidelity High Dividend

Franklin International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Franklin International Core has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Franklin International is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Fidelity High Dividend

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fidelity High Dividend has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Fidelity High is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Franklin International and Fidelity High

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

The idea behind Franklin International Core and Fidelity High Dividend 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.