Correlation Between Franklin Low and Fidelity Advisor

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

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

Diversification Opportunities for Franklin Low and Fidelity Advisor

-0.32

Correlation Coefficient

Franklin Low  Fidelity Advisor

Very good diversification

The 3 months correlation between Franklin and Fidelity is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Low Duration and Fidelity Advisor Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Advisor Gold and Franklin Low 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 Low Duration are associated (or correlated) with Fidelity Advisor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Advisor Gold has no effect on the direction of Franklin Low i.e., Franklin Low and Fidelity Advisor go up and down completely randomly.

Pair Corralation between Franklin Low and Fidelity Advisor

Assuming the 90 days horizon Franklin Low is expected to generate 18.37 times less return on investment than Fidelity Advisor. But when comparing it to its historical volatility, Franklin Low Duration is 12.81 times less risky than Fidelity Advisor. It trades about 0.21 of its potential returns per unit of risk. Fidelity Advisor Gold is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest  2,482  in Fidelity Advisor Gold on October 26, 2024 and sell it today you would earn a total of  209.00  from holding Fidelity Advisor Gold or generate 8.42% return on investment over 90 days.

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

Franklin Low Duration  vs.  Fidelity Advisor Gold

Franklin Low Duration

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Low Duration are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Franklin Low is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Fidelity Advisor Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fidelity Advisor Gold has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Fidelity Advisor 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 Low and Fidelity Advisor

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

The idea behind Franklin Low Duration and Fidelity Advisor Gold 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.