Correlation Between Franklin Libertyshares and Fidelity Sustainable

Can any of the company-specific risk be diversified away by investing in both Franklin Libertyshares 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 Libertyshares 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 Libertyshares ICAV and Fidelity Sustainable USD, you can compare the effects of market volatilities on Franklin Libertyshares 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 Libertyshares with a short position of Fidelity Sustainable. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Libertyshares and Fidelity Sustainable.

Diversification Opportunities for Franklin Libertyshares and Fidelity Sustainable

0.79

Correlation Coefficient

Franklin Libertyshares  Fidelity Sustainable

Poor diversification

The 3 months correlation between Franklin and Fidelity is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Libertyshares ICAV and Fidelity Sustainable USD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Sustainable USD and Franklin Libertyshares 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 Libertyshares ICAV 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 USD has no effect on the direction of Franklin Libertyshares i.e., Franklin Libertyshares and Fidelity Sustainable go up and down completely randomly.

Pair Corralation between Franklin Libertyshares and Fidelity Sustainable

Assuming the 90 days trading horizon Franklin Libertyshares ICAV is expected to generate 3.21 times more return on investment than Fidelity Sustainable. However, Franklin Libertyshares is 3.21 times more volatile than Fidelity Sustainable USD. It trades about 0.06 of its potential returns per unit of risk. Fidelity Sustainable USD is currently generating about 0.2 per unit of risk. If you would invest  2,731  in Franklin Libertyshares ICAV on December 2, 2024 and sell it today you would earn a total of  74.00  from holding Franklin Libertyshares ICAV or generate 2.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	97.67%
Values	Daily Returns

Franklin Libertyshares ICAV  vs.  Fidelity Sustainable USD

Franklin Libertyshares

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Libertyshares ICAV are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Franklin Libertyshares is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Fidelity Sustainable USD

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Sustainable USD are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Fidelity Sustainable is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Franklin Libertyshares and Fidelity Sustainable

The main advantage of trading using opposite Franklin Libertyshares and Fidelity Sustainable positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Libertyshares 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 Libertyshares ICAV and Fidelity Sustainable USD 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.