Correlation Between Fidelity Freedom and Mid Cap
Can any of the company-specific risk be diversified away by investing in both Fidelity Freedom and Mid Cap 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 Mid Cap 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 Mid Cap Growth, you can compare the effects of market volatilities on Fidelity Freedom and Mid Cap 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 Mid Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Freedom and Mid Cap.
Diversification Opportunities for Fidelity Freedom and Mid Cap
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fidelity and Mid is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Freedom Blend and Mid Cap Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mid Cap Growth 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 Mid Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mid Cap Growth has no effect on the direction of Fidelity Freedom i.e., Fidelity Freedom and Mid Cap go up and down completely randomly.
Pair Corralation between Fidelity Freedom and Mid Cap
Assuming the 90 days horizon Fidelity Freedom is expected to generate 10.52 times less return on investment than Mid Cap. But when comparing it to its historical volatility, Fidelity Freedom Blend is 1.92 times less risky than Mid Cap. It trades about 0.07 of its potential returns per unit of risk. Mid Cap Growth is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest 3,717 in Mid Cap Growth on August 26, 2024 and sell it today you would earn a total of 424.00 from holding Mid Cap Growth or generate 11.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Freedom Blend vs. Mid Cap Growth
Performance |
| Timeline |
| Fidelity Freedom Blend |
| Mid Cap Growth |
Fidelity Freedom and Mid Cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Freedom and Mid Cap
The main advantage of trading using opposite Fidelity Freedom and Mid Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Freedom position performs unexpectedly, Mid Cap 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 Mid Cap will offset losses from the drop in Mid Cap's long position.| Fidelity Freedom vs. Morningstar Unconstrained Allocation | Fidelity Freedom vs. T Rowe Price | Fidelity Freedom vs. Touchstone Large Cap | Fidelity Freedom vs. Goldman Sachs Large |
| Mid Cap vs. Touchstone Sustainability And | Mid Cap vs. Growth Opportunities Fund | Mid Cap vs. Total Return Fund | Mid Cap vs. William Blair International |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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