Correlation Between Fidelity High and Franklin Templeton

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

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

Diversification Opportunities for Fidelity High and Franklin Templeton

0.31

Correlation Coefficient

Fidelity High  Franklin Templeton

Weak diversification

The 3 months correlation between Fidelity and Franklin is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity High Dividend and Franklin Templeton ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Templeton ETF and Fidelity High 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 High Dividend are associated (or correlated) with Franklin Templeton. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Templeton ETF has no effect on the direction of Fidelity High i.e., Fidelity High and Franklin Templeton go up and down completely randomly.

Pair Corralation between Fidelity High and Franklin Templeton

Given the investment horizon of 90 days Fidelity High Dividend is expected to under-perform the Franklin Templeton. But the etf apears to be less risky and, when comparing its historical volatility, Fidelity High Dividend is 1.15 times less risky than Franklin Templeton. The etf trades about -0.01 of its potential returns per unit of risk. The Franklin Templeton ETF is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  2,658  in Franklin Templeton ETF on December 30, 2024 and sell it today you would earn a total of  57.00  from holding Franklin Templeton ETF or generate 2.14% return on investment over 90 days.

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

Fidelity High Dividend  vs.  Franklin Templeton ETF

Fidelity High Dividend

Risk-Adjusted Performance

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 current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Franklin Templeton ETF

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Templeton ETF are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Franklin Templeton is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Fidelity High and Franklin Templeton

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

The idea behind Fidelity High Dividend and Franklin Templeton ETF 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.