Correlation Between American Funds and Fidelity Freedom
Can any of the company-specific risk be diversified away by investing in both American Funds 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 American Funds and Fidelity Freedom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds 2020 and Fidelity Freedom 2020, you can compare the effects of market volatilities on American Funds 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 American Funds with a short position of Fidelity Freedom. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Fidelity Freedom.
Diversification Opportunities for American Funds and Fidelity Freedom
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between American and Fidelity is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding American Funds 2020 and Fidelity Freedom 2020 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Freedom 2020 and American Funds 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 American Funds 2020 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 2020 has no effect on the direction of American Funds i.e., American Funds and Fidelity Freedom go up and down completely randomly.
Pair Corralation between American Funds and Fidelity Freedom
Assuming the 90 days horizon American Funds is expected to generate 1.01 times less return on investment than Fidelity Freedom. But when comparing it to its historical volatility, American Funds 2020 is 1.24 times less risky than Fidelity Freedom. It trades about 0.15 of its potential returns per unit of risk. Fidelity Freedom 2020 is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,328 in Fidelity Freedom 2020 on September 4, 2024 and sell it today you would earn a total of 192.00 from holding Fidelity Freedom 2020 or generate 14.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.6% |
| Values | Daily Returns |
American Funds 2020 vs. Fidelity Freedom 2020
Performance |
| Timeline |
| American Funds 2020 |
| Fidelity Freedom 2020 |
American Funds and Fidelity Freedom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Fidelity Freedom
The main advantage of trading using opposite American Funds and Fidelity Freedom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds 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.| American Funds vs. American Funds 2025 | American Funds vs. American Funds 2030 | American Funds vs. American Funds 2035 | American Funds vs. American Funds 2040 |
| Fidelity Freedom vs. Allianzgi Convertible Income | Fidelity Freedom vs. Rationalpier 88 Convertible | Fidelity Freedom vs. Putnam Convertible Incm Gwth | Fidelity Freedom vs. Calamos Dynamic Convertible |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments |