Correlation Between Fidelity New and Fidelity Freedom
Can any of the company-specific risk be diversified away by investing in both Fidelity New 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 Fidelity New and Fidelity Freedom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity New Markets and Fidelity Freedom 2010, you can compare the effects of market volatilities on Fidelity New 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 Fidelity New with a short position of Fidelity Freedom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity New and Fidelity Freedom.
Diversification Opportunities for Fidelity New and Fidelity Freedom
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Fidelity and FIDELITY is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity New Markets and Fidelity Freedom 2010 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Freedom 2010 and Fidelity New 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 New Markets 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 2010 has no effect on the direction of Fidelity New i.e., Fidelity New and Fidelity Freedom go up and down completely randomly.
Pair Corralation between Fidelity New and Fidelity Freedom
Assuming the 90 days horizon Fidelity New Markets is expected to generate 1.11 times more return on investment than Fidelity Freedom. However, Fidelity New is 1.11 times more volatile than Fidelity Freedom 2010. It trades about 0.13 of its potential returns per unit of risk. Fidelity Freedom 2010 is currently generating about 0.09 per unit of risk. If you would invest 1,065 in Fidelity New Markets on August 31, 2024 and sell it today you would earn a total of 219.00 from holding Fidelity New Markets or generate 20.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity New Markets vs. Fidelity Freedom 2010
Performance |
| Timeline |
| Fidelity New Markets |
| Fidelity Freedom 2010 |
Fidelity New and Fidelity Freedom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity New and Fidelity Freedom
The main advantage of trading using opposite Fidelity New and Fidelity Freedom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity New 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.| Fidelity New vs. Fidelity New Markets | Fidelity New vs. Fidelity New Markets | Fidelity New vs. Mfs Emerging Markets |
| Fidelity Freedom vs. Energy Basic Materials | Fidelity Freedom vs. Gamco Natural Resources | Fidelity Freedom vs. Franklin Natural Resources | Fidelity Freedom vs. Dreyfus Natural Resources |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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