Correlation Between Ab Bond and Fidelity Freedom
Can any of the company-specific risk be diversified away by investing in both Ab Bond 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 Ab Bond and Fidelity Freedom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ab Bond Inflation and Fidelity Freedom Index, you can compare the effects of market volatilities on Ab Bond 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 Ab Bond with a short position of Fidelity Freedom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Bond and Fidelity Freedom.
Diversification Opportunities for Ab Bond and Fidelity Freedom
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between ABNCX and Fidelity is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Ab Bond Inflation 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 Ab Bond 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 Ab Bond Inflation 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 Ab Bond i.e., Ab Bond and Fidelity Freedom go up and down completely randomly.
Pair Corralation between Ab Bond and Fidelity Freedom
Assuming the 90 days horizon Ab Bond is expected to generate 11.23 times less return on investment than Fidelity Freedom. But when comparing it to its historical volatility, Ab Bond Inflation is 3.16 times less risky than Fidelity Freedom. It trades about 0.09 of its potential returns per unit of risk. Fidelity Freedom Index is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 2,500 in Fidelity Freedom Index on September 1, 2024 and sell it today you would earn a total of 85.00 from holding Fidelity Freedom Index or generate 3.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ab Bond Inflation vs. Fidelity Freedom Index
Performance |
| Timeline |
| Ab Bond Inflation |
| Fidelity Freedom Index |
Ab Bond and Fidelity Freedom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab Bond and Fidelity Freedom
The main advantage of trading using opposite Ab Bond and Fidelity Freedom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Bond 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.| Ab Bond vs. Jhancock Disciplined Value | Ab Bond vs. Touchstone Large Cap | Ab Bond vs. Large Cap Growth Profund | Ab Bond vs. Qs Large Cap |
| Fidelity Freedom vs. Ab Bond Inflation | Fidelity Freedom vs. Nationwide Inflation Protected Securities | Fidelity Freedom vs. Aqr Managed Futures | Fidelity Freedom vs. Western Asset Inflation |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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