Correlation Between Omni Small and Fidelity Freedom
Can any of the company-specific risk be diversified away by investing in both Omni Small 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 Omni Small and Fidelity Freedom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Omni Small Cap Value and Fidelity Freedom Index, you can compare the effects of market volatilities on Omni Small 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 Omni Small with a short position of Fidelity Freedom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Omni Small and Fidelity Freedom.
Diversification Opportunities for Omni Small and Fidelity Freedom
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Omni and Fidelity is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Omni Small Cap Value 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 Omni Small 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 Omni Small Cap Value 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 Omni Small i.e., Omni Small and Fidelity Freedom go up and down completely randomly.
Pair Corralation between Omni Small and Fidelity Freedom
Assuming the 90 days horizon Omni Small Cap Value is expected to generate 1.42 times more return on investment than Fidelity Freedom. However, Omni Small is 1.42 times more volatile than Fidelity Freedom Index. It trades about 0.08 of its potential returns per unit of risk. Fidelity Freedom Index is currently generating about 0.1 per unit of risk. If you would invest 1,826 in Omni Small Cap Value on October 25, 2024 and sell it today you would earn a total of 26.00 from holding Omni Small Cap Value or generate 1.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Omni Small Cap Value vs. Fidelity Freedom Index
Performance |
| Timeline |
| Omni Small Cap |
| Fidelity Freedom Index |
Omni Small and Fidelity Freedom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Omni Small and Fidelity Freedom
The main advantage of trading using opposite Omni Small and Fidelity Freedom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Omni Small 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.| Omni Small vs. Jhancock Diversified Macro | Omni Small vs. Goldman Sachs Short Term | Omni Small vs. Wells Fargo Diversified | Omni Small vs. Allianzgi Diversified Income |
| Fidelity Freedom vs. Short Real Estate | Fidelity Freedom vs. Nexpoint Real Estate | Fidelity Freedom vs. Fidelity Real Estate | Fidelity Freedom vs. Columbia Real Estate |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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