Correlation Between Fidelity Freedom and Franklin Conservative

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

By analyzing existing cross correlation between Fidelity Freedom 2050 and Franklin Servative Allocation, you can compare the effects of market volatilities on Fidelity Freedom and Franklin Conservative 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 Freedom with a short position of Franklin Conservative. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Freedom and Franklin Conservative.

Diversification Opportunities for Fidelity Freedom and Franklin Conservative

0.99

Correlation Coefficient

Fidelity Freedom  Franklin Conservative

No risk reduction

The 3 months correlation between Fidelity and Franklin is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Freedom 2050 and Franklin Servative Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Conservative and Fidelity Freedom 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 Freedom 2050 are associated (or correlated) with Franklin Conservative. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Conservative has no effect on the direction of Fidelity Freedom i.e., Fidelity Freedom and Franklin Conservative go up and down completely randomly.

Pair Corralation between Fidelity Freedom and Franklin Conservative

Assuming the 90 days horizon Fidelity Freedom 2050 is expected to generate 2.0 times more return on investment than Franklin Conservative. However, Fidelity Freedom is 2.0 times more volatile than Franklin Servative Allocation. It trades about 0.19 of its potential returns per unit of risk. Franklin Servative Allocation is currently generating about 0.21 per unit of risk. If you would invest  1,510  in Fidelity Freedom 2050 on August 6, 2025 and sell it today you would earn a total of  110.00  from holding Fidelity Freedom 2050 or generate 7.28% return on investment over 90 days.

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

Fidelity Freedom 2050  vs.  Franklin Servative Allocation

Fidelity Freedom 2050

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Freedom 2050 are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental drivers, Fidelity Freedom may actually be approaching a critical reversion point that can send shares even higher in December 2025.

Franklin Conservative

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Servative Allocation are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Franklin Conservative is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Fidelity Freedom and Franklin Conservative

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

The idea behind Fidelity Freedom 2050 and Franklin Servative Allocation 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 Global Correlations module to find global opportunities by holding instruments from different markets.