Correlation Between Fidelity Asset and Fidelity Freedom
Can any of the company-specific risk be diversified away by investing in both Fidelity Asset 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 Fidelity Asset and Fidelity Freedom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Asset Manager and Fidelity Freedom 2040, you can compare the effects of market volatilities on Fidelity Asset 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 Fidelity Asset with a short position of Fidelity Freedom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Asset and Fidelity Freedom.
Diversification Opportunities for Fidelity Asset and Fidelity Freedom
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Fidelity and Fidelity is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Asset Manager and Fidelity Freedom 2040 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Freedom 2040 and Fidelity Asset 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 Fidelity Asset Manager 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 2040 has no effect on the direction of Fidelity Asset i.e., Fidelity Asset and Fidelity Freedom go up and down completely randomly.
Pair Corralation between Fidelity Asset and Fidelity Freedom
Assuming the 90 days horizon Fidelity Asset is expected to generate 1.16 times less return on investment than Fidelity Freedom. But when comparing it to its historical volatility, Fidelity Asset Manager is 1.19 times less risky than Fidelity Freedom. It trades about 0.1 of its potential returns per unit of risk. Fidelity Freedom 2040 is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 905.00 in Fidelity Freedom 2040 on August 31, 2024 and sell it today you would earn a total of 308.00 from holding Fidelity Freedom 2040 or generate 34.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Asset Manager vs. Fidelity Freedom 2040
Performance |
| Timeline |
| Fidelity Asset Manager |
| Fidelity Freedom 2040 |
Fidelity Asset and Fidelity Freedom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Asset and Fidelity Freedom
The main advantage of trading using opposite Fidelity Asset and Fidelity Freedom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Asset 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.| Fidelity Asset vs. Fidelity Asset Manager | Fidelity Asset vs. Fidelity Asset Manager | Fidelity Asset vs. Fidelity Advisor Balanced | Fidelity Asset vs. Fidelity Advisor Balanced |
| Fidelity Freedom vs. Fidelity Freedom 2030 | Fidelity Freedom vs. Fidelity Freedom 2010 | Fidelity Freedom vs. Fidelity Freedom Income | Fidelity Freedom vs. Fidelity Freedom 2020 |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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