Correlation Between Fidelity Advisor and Franklin Lifesmart
Can any of the company-specific risk be diversified away by investing in both Fidelity Advisor and Franklin Lifesmart 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 Advisor and Franklin Lifesmart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Advisor Energy and Franklin Lifesmart 2040, you can compare the effects of market volatilities on Fidelity Advisor and Franklin Lifesmart 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 Advisor with a short position of Franklin Lifesmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Advisor and Franklin Lifesmart.
Diversification Opportunities for Fidelity Advisor and Franklin Lifesmart
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Fidelity and Franklin is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Advisor Energy and Franklin Lifesmart 2040 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Lifesmart 2040 and Fidelity Advisor 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 Advisor Energy are associated (or correlated) with Franklin Lifesmart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Lifesmart 2040 has no effect on the direction of Fidelity Advisor i.e., Fidelity Advisor and Franklin Lifesmart go up and down completely randomly.
Pair Corralation between Fidelity Advisor and Franklin Lifesmart
Assuming the 90 days horizon Fidelity Advisor Energy is expected to under-perform the Franklin Lifesmart. In addition to that, Fidelity Advisor is 1.47 times more volatile than Franklin Lifesmart 2040. It trades about -0.66 of its total potential returns per unit of risk. Franklin Lifesmart 2040 is currently generating about -0.1 per unit of volatility. If you would invest 1,465 in Franklin Lifesmart 2040 on September 24, 2024 and sell it today you would lose (19.00) from holding Franklin Lifesmart 2040 or give up 1.3% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Fidelity Advisor Energy vs. Franklin Lifesmart 2040
Performance |
Timeline |
Fidelity Advisor Energy |
Franklin Lifesmart 2040 |
Fidelity Advisor and Franklin Lifesmart Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Fidelity Advisor and Franklin Lifesmart
The main advantage of trading using opposite Fidelity Advisor and Franklin Lifesmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Advisor position performs unexpectedly, Franklin Lifesmart 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 Lifesmart will offset losses from the drop in Franklin Lifesmart's long position.Fidelity Advisor vs. Fidelity Freedom 2015 | Fidelity Advisor vs. Fidelity Puritan Fund | Fidelity Advisor vs. Fidelity Puritan Fund | Fidelity Advisor vs. Fidelity Pennsylvania Municipal |
Franklin Lifesmart vs. Firsthand Alternative Energy | Franklin Lifesmart vs. Fidelity Advisor Energy | Franklin Lifesmart vs. Franklin Natural Resources | Franklin Lifesmart vs. Icon Natural Resources |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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