Correlation Between Fidelity Freedom and Western Assets
Can any of the company-specific risk be diversified away by investing in both Fidelity Freedom and Western Assets 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 Western Assets 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 Western Assets Emerging, you can compare the effects of market volatilities on Fidelity Freedom and Western Assets 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 Western Assets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Freedom and Western Assets.
Diversification Opportunities for Fidelity Freedom and Western Assets
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Fidelity and Western is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Freedom Blend and Western Assets Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Assets Emerging 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 Western Assets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Assets Emerging has no effect on the direction of Fidelity Freedom i.e., Fidelity Freedom and Western Assets go up and down completely randomly.
Pair Corralation between Fidelity Freedom and Western Assets
Assuming the 90 days horizon Fidelity Freedom Blend is expected to generate 1.53 times more return on investment than Western Assets. However, Fidelity Freedom is 1.53 times more volatile than Western Assets Emerging. It trades about 0.15 of its potential returns per unit of risk. Western Assets Emerging is currently generating about 0.2 per unit of risk. If you would invest 1,306 in Fidelity Freedom Blend on September 13, 2024 and sell it today you would earn a total of 16.00 from holding Fidelity Freedom Blend or generate 1.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Freedom Blend vs. Western Assets Emerging
Performance |
| Timeline |
| Fidelity Freedom Blend |
| Western Assets Emerging |
Fidelity Freedom and Western Assets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Freedom and Western Assets
The main advantage of trading using opposite Fidelity Freedom and Western Assets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Freedom position performs unexpectedly, Western Assets 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 Western Assets will offset losses from the drop in Western Assets' long position.| Fidelity Freedom vs. Victory Rs Partners | Fidelity Freedom vs. Valic Company I | Fidelity Freedom vs. Fidelity Small Cap | Fidelity Freedom vs. Boston Partners Small |
| Western Assets vs. Ftfa Franklin Templeton Growth | Western Assets vs. Smallcap Growth Fund | Western Assets vs. T Rowe Price | Western Assets vs. Champlain Mid 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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