Correlation Between Dow Jones and Fidelity Freedom
Can any of the company-specific risk be diversified away by investing in both Dow Jones 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 Dow Jones and Fidelity Freedom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and Fidelity Freedom Blend, you can compare the effects of market volatilities on Dow Jones 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 Dow Jones with a short position of Fidelity Freedom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Fidelity Freedom.
Diversification Opportunities for Dow Jones and Fidelity Freedom
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dow and Fidelity is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Fidelity Freedom Blend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Freedom Blend and Dow Jones 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 Dow Jones Industrial 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 Blend has no effect on the direction of Dow Jones i.e., Dow Jones and Fidelity Freedom go up and down completely randomly.
Pair Corralation between Dow Jones and Fidelity Freedom
Assuming the 90 days trading horizon Dow Jones is expected to generate 1.08 times less return on investment than Fidelity Freedom. But when comparing it to its historical volatility, Dow Jones Industrial is 1.0 times less risky than Fidelity Freedom. It trades about 0.08 of its potential returns per unit of risk. Fidelity Freedom Blend is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 960.00 in Fidelity Freedom Blend on August 30, 2024 and sell it today you would earn a total of 355.00 from holding Fidelity Freedom Blend or generate 36.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Fidelity Freedom Blend
Performance |
| Timeline |
Dow Jones and Fidelity Freedom Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Fidelity Freedom Blend
Pair trading matchups for Fidelity Freedom
Pair Trading with Dow Jones and Fidelity Freedom
The main advantage of trading using opposite Dow Jones and Fidelity Freedom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones 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.| Dow Jones vs. Kaltura | Dow Jones vs. Artisan Partners Asset | Dow Jones vs. US Global Investors | Dow Jones vs. Analog Devices |
| Fidelity Freedom vs. Fidelity Freedom Index | Fidelity Freedom vs. HUMANA INC | Fidelity Freedom vs. Aquagold International | Fidelity Freedom vs. Barloworld Ltd ADR |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
Other Complementary Tools
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years |