Correlation Between Fabxx and Fidelity Freedom
Can any of the company-specific risk be diversified away by investing in both Fabxx 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 Fabxx and Fidelity Freedom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fabxx and Fidelity Freedom 2035, you can compare the effects of market volatilities on Fabxx 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 Fabxx with a short position of Fidelity Freedom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fabxx and Fidelity Freedom.
Diversification Opportunities for Fabxx and Fidelity Freedom
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Fabxx and Fidelity is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Fabxx and Fidelity Freedom 2035 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Freedom 2035 and Fabxx 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 Fabxx 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 2035 has no effect on the direction of Fabxx i.e., Fabxx and Fidelity Freedom go up and down completely randomly.
Pair Corralation between Fabxx and Fidelity Freedom
Assuming the 90 days horizon Fabxx is expected to under-perform the Fidelity Freedom. In addition to that, Fabxx is 8.7 times more volatile than Fidelity Freedom 2035. It trades about -0.05 of its total potential returns per unit of risk. Fidelity Freedom 2035 is currently generating about 0.11 per unit of volatility. If you would invest 1,430 in Fidelity Freedom 2035 on September 12, 2024 and sell it today you would earn a total of 226.00 from holding Fidelity Freedom 2035 or generate 15.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fabxx vs. Fidelity Freedom 2035
Performance |
| Timeline |
| Fabxx |
| Fidelity Freedom 2035 |
Fabxx and Fidelity Freedom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fabxx and Fidelity Freedom
The main advantage of trading using opposite Fabxx and Fidelity Freedom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fabxx 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.| Fabxx vs. Vanguard Total Stock | Fabxx vs. Vanguard 500 Index | Fabxx vs. Vanguard Total Stock | Fabxx vs. Vanguard Total Stock |
| Fidelity Freedom vs. Fidelity Freedom 2035 | Fidelity Freedom vs. HUMANA INC | Fidelity Freedom vs. Barloworld Ltd ADR | Fidelity Freedom vs. Morningstar Unconstrained Allocation |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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