Correlation Between Dreyfus Natural and Fidelity Freedom
Can any of the company-specific risk be diversified away by investing in both Dreyfus Natural 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 Dreyfus Natural and Fidelity Freedom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dreyfus Natural Resources and Fidelity Freedom 2010, you can compare the effects of market volatilities on Dreyfus Natural 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 Dreyfus Natural with a short position of Fidelity Freedom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dreyfus Natural and Fidelity Freedom.
Diversification Opportunities for Dreyfus Natural and Fidelity Freedom
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Dreyfus and FIDELITY is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Dreyfus Natural Resources and Fidelity Freedom 2010 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Freedom 2010 and Dreyfus Natural 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 Dreyfus Natural Resources 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 2010 has no effect on the direction of Dreyfus Natural i.e., Dreyfus Natural and Fidelity Freedom go up and down completely randomly.
Pair Corralation between Dreyfus Natural and Fidelity Freedom
Assuming the 90 days horizon Dreyfus Natural is expected to generate 1.76 times less return on investment than Fidelity Freedom. In addition to that, Dreyfus Natural is 3.69 times more volatile than Fidelity Freedom 2010. It trades about 0.01 of its total potential returns per unit of risk. Fidelity Freedom 2010 is currently generating about 0.09 per unit of volatility. If you would invest 1,294 in Fidelity Freedom 2010 on August 31, 2024 and sell it today you would earn a total of 161.00 from holding Fidelity Freedom 2010 or generate 12.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.73% |
| Values | Daily Returns |
Dreyfus Natural Resources vs. Fidelity Freedom 2010
Performance |
| Timeline |
| Dreyfus Natural Resources |
| Fidelity Freedom 2010 |
Dreyfus Natural and Fidelity Freedom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dreyfus Natural and Fidelity Freedom
The main advantage of trading using opposite Dreyfus Natural and Fidelity Freedom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dreyfus Natural 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.| Dreyfus Natural vs. Calamos Global Equity | Dreyfus Natural vs. Balanced Fund Retail | Dreyfus Natural vs. Scharf Fund Retail | Dreyfus Natural vs. Cutler Equity |
| Fidelity Freedom vs. Energy Basic Materials | Fidelity Freedom vs. Gamco Natural Resources | Fidelity Freedom vs. Franklin Natural Resources | Fidelity Freedom vs. Dreyfus Natural Resources |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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