Correlation Between Fidelity Freedom and Sparta Capital
Can any of the company-specific risk be diversified away by investing in both Fidelity Freedom and Sparta Capital 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 Sparta Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Freedom 2040 and Sparta Capital, you can compare the effects of market volatilities on Fidelity Freedom and Sparta Capital 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 Sparta Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Freedom and Sparta Capital.
Diversification Opportunities for Fidelity Freedom and Sparta Capital
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Fidelity and Sparta is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Freedom 2040 and Sparta Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sparta Capital 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 2040 are associated (or correlated) with Sparta Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sparta Capital has no effect on the direction of Fidelity Freedom i.e., Fidelity Freedom and Sparta Capital go up and down completely randomly.
Pair Corralation between Fidelity Freedom and Sparta Capital
Assuming the 90 days horizon Fidelity Freedom 2040 is expected to generate 0.11 times more return on investment than Sparta Capital. However, Fidelity Freedom 2040 is 9.23 times less risky than Sparta Capital. It trades about 0.22 of its potential returns per unit of risk. Sparta Capital is currently generating about -0.22 per unit of risk. If you would invest 1,183 in Fidelity Freedom 2040 on September 1, 2024 and sell it today you would earn a total of 30.00 from holding Fidelity Freedom 2040 or generate 2.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Freedom 2040 vs. Sparta Capital
Performance |
| Timeline |
| Fidelity Freedom 2040 |
| Sparta Capital |
Fidelity Freedom and Sparta Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Freedom and Sparta Capital
The main advantage of trading using opposite Fidelity Freedom and Sparta Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Freedom position performs unexpectedly, Sparta Capital 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 Sparta Capital will offset losses from the drop in Sparta Capital's long position.| Fidelity Freedom vs. Fidelity Freedom 2030 | Fidelity Freedom vs. Fidelity Freedom 2010 | Fidelity Freedom vs. Fidelity Freedom Income | Fidelity Freedom vs. Fidelity Freedom 2020 |
| Sparta Capital vs. Legacy Education | Sparta Capital vs. Apple Inc | Sparta Capital vs. NVIDIA | Sparta Capital vs. Microsoft |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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