Correlation Between Pro-blend(r) Moderate and Fidelity Freedom
Can any of the company-specific risk be diversified away by investing in both Pro-blend(r) Moderate 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 Pro-blend(r) Moderate and Fidelity Freedom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pro Blend Moderate Term and Fidelity Freedom 2015, you can compare the effects of market volatilities on Pro-blend(r) Moderate 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 Pro-blend(r) Moderate with a short position of Fidelity Freedom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pro-blend(r) Moderate and Fidelity Freedom.
Diversification Opportunities for Pro-blend(r) Moderate and Fidelity Freedom
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Pro-blend(r) and Fidelity is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Pro Blend Moderate Term and Fidelity Freedom 2015 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Freedom 2015 and Pro-blend(r) Moderate 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 Pro Blend Moderate Term 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 2015 has no effect on the direction of Pro-blend(r) Moderate i.e., Pro-blend(r) Moderate and Fidelity Freedom go up and down completely randomly.
Pair Corralation between Pro-blend(r) Moderate and Fidelity Freedom
Assuming the 90 days horizon Pro-blend(r) Moderate is expected to generate 1.14 times less return on investment than Fidelity Freedom. In addition to that, Pro-blend(r) Moderate is 1.01 times more volatile than Fidelity Freedom 2015. It trades about 0.2 of its total potential returns per unit of risk. Fidelity Freedom 2015 is currently generating about 0.23 per unit of volatility. If you would invest 1,175 in Fidelity Freedom 2015 on September 1, 2024 and sell it today you would earn a total of 21.00 from holding Fidelity Freedom 2015 or generate 1.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pro Blend Moderate Term vs. Fidelity Freedom 2015
Performance |
| Timeline |
| Pro-blend(r) Moderate |
| Fidelity Freedom 2015 |
Pro-blend(r) Moderate and Fidelity Freedom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pro-blend(r) Moderate and Fidelity Freedom
The main advantage of trading using opposite Pro-blend(r) Moderate and Fidelity Freedom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pro-blend(r) Moderate 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.| Pro-blend(r) Moderate vs. Pro Blend Servative Term | Pro-blend(r) Moderate vs. Pro Blend Extended Term | Pro-blend(r) Moderate vs. Pro Blend Maximum Term | Pro-blend(r) Moderate vs. Greenspring Fund Retail |
| Fidelity Freedom vs. Wisdomtree Siegel Moderate | Fidelity Freedom vs. Franklin Lifesmart Retirement | Fidelity Freedom vs. Dimensional Retirement Income | Fidelity Freedom vs. Pro Blend Moderate Term |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
Other Complementary Tools
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments |