Correlation Between American Century and Fidelity Freedom
Can any of the company-specific risk be diversified away by investing in both American Century and Fidelity Freedom 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 American Century and Fidelity Freedom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Century One and Fidelity Freedom Index, you can compare the effects of market volatilities on American Century and Fidelity Freedom 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 American Century with a short position of Fidelity Freedom. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Century and Fidelity Freedom.
Diversification Opportunities for American Century and Fidelity Freedom
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between American and Fidelity is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding American Century One and Fidelity Freedom Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Freedom Index and American Century 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 American Century One are associated (or correlated) with Fidelity Freedom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Freedom Index has no effect on the direction of American Century i.e., American Century and Fidelity Freedom go up and down completely randomly.
Pair Corralation between American Century and Fidelity Freedom
Assuming the 90 days horizon American Century One is expected to generate 1.01 times more return on investment than Fidelity Freedom. However, American Century is 1.01 times more volatile than Fidelity Freedom Index. It trades about 0.15 of its potential returns per unit of risk. Fidelity Freedom Index is currently generating about 0.14 per unit of risk. If you would invest 888.00 in American Century One on September 1, 2024 and sell it today you would earn a total of 278.00 from holding American Century One or generate 31.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Century One vs. Fidelity Freedom Index
Performance |
| Timeline |
| American Century One |
| Fidelity Freedom Index |
American Century and Fidelity Freedom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Century and Fidelity Freedom
The main advantage of trading using opposite American Century and Fidelity Freedom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Century position performs unexpectedly, Fidelity Freedom 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 Freedom will offset losses from the drop in Fidelity Freedom's long position.| American Century vs. Jpmorgan Trust I | American Century vs. Pimco Funds | American Century vs. Franklin Government Money | American Century vs. T Rowe Price |
| Fidelity Freedom vs. Fidelity Freedom Index | Fidelity Freedom vs. Fidelity Freedom Index | Fidelity Freedom vs. Fidelity Freedom Index | Fidelity Freedom vs. Fidelity Freedom Index |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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