Correlation Between Ford and Fidelity Freedom
Can any of the company-specific risk be diversified away by investing in both Ford 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 Ford and Fidelity Freedom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Fidelity Freedom Index, you can compare the effects of market volatilities on Ford 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 Ford with a short position of Fidelity Freedom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Fidelity Freedom.
Diversification Opportunities for Ford and Fidelity Freedom
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ford and Fidelity is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor 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 Ford 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 Ford Motor 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 Ford i.e., Ford and Fidelity Freedom go up and down completely randomly.
Pair Corralation between Ford and Fidelity Freedom
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Fidelity Freedom. In addition to that, Ford is 9.0 times more volatile than Fidelity Freedom Index. It trades about -0.02 of its total potential returns per unit of risk. Fidelity Freedom Index is currently generating about 0.13 per unit of volatility. If you would invest 1,133 in Fidelity Freedom Index on September 3, 2024 and sell it today you would earn a total of 67.00 from holding Fidelity Freedom Index or generate 5.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Fidelity Freedom Index
Performance |
| Timeline |
| Ford Motor |
| Fidelity Freedom Index |
Ford and Fidelity Freedom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Fidelity Freedom
The main advantage of trading using opposite Ford and Fidelity Freedom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford 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.| Ford vs. GreenPower Motor | Ford vs. ZEEKR Intelligent Technology | Ford vs. Volcon Inc | Ford vs. Ford Motor |
| Fidelity Freedom vs. Rbc Small Cap | Fidelity Freedom vs. Champlain Small | Fidelity Freedom vs. Ab Small Cap | Fidelity Freedom vs. Artisan Small Cap |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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