Correlation Between Fidelity Freedom and Walden Midcap
Can any of the company-specific risk be diversified away by investing in both Fidelity Freedom and Walden Midcap 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 Freedom and Walden Midcap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Freedom Blend and Walden Midcap Fund, you can compare the effects of market volatilities on Fidelity Freedom and Walden Midcap 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 Freedom with a short position of Walden Midcap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Freedom and Walden Midcap.
Diversification Opportunities for Fidelity Freedom and Walden Midcap
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fidelity and Walden is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Freedom Blend and Walden Midcap Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walden Midcap and Fidelity Freedom 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 Freedom Blend are associated (or correlated) with Walden Midcap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walden Midcap has no effect on the direction of Fidelity Freedom i.e., Fidelity Freedom and Walden Midcap go up and down completely randomly.
Pair Corralation between Fidelity Freedom and Walden Midcap
Assuming the 90 days horizon Fidelity Freedom Blend is expected to generate 0.84 times more return on investment than Walden Midcap. However, Fidelity Freedom Blend is 1.18 times less risky than Walden Midcap. It trades about 0.08 of its potential returns per unit of risk. Walden Midcap Fund is currently generating about 0.04 per unit of risk. If you would invest 961.00 in Fidelity Freedom Blend on December 12, 2024 and sell it today you would earn a total of 281.00 from holding Fidelity Freedom Blend or generate 29.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Fidelity Freedom Blend vs. Walden Midcap Fund
Performance |
| Timeline |
| Fidelity Freedom Blend |
| Walden Midcap |
Fidelity Freedom and Walden Midcap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Freedom and Walden Midcap
The main advantage of trading using opposite Fidelity Freedom and Walden Midcap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Freedom position performs unexpectedly, Walden Midcap 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 Walden Midcap will offset losses from the drop in Walden Midcap's long position.| Fidelity Freedom vs. Pace Strategic Fixed | ||
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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