Correlation Between Fidelity Freedom and Target 2055
Can any of the company-specific risk be diversified away by investing in both Fidelity Freedom and Target 2055 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 Target 2055 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 Target 2055 Fund, you can compare the effects of market volatilities on Fidelity Freedom and Target 2055 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 Target 2055. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Freedom and Target 2055.
Diversification Opportunities for Fidelity Freedom and Target 2055
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Fidelity and Target is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Freedom Blend and Target 2055 Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Target 2055 Fund 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 Target 2055. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Target 2055 Fund has no effect on the direction of Fidelity Freedom i.e., Fidelity Freedom and Target 2055 go up and down completely randomly.
Pair Corralation between Fidelity Freedom and Target 2055
Assuming the 90 days horizon Fidelity Freedom is expected to generate 1.06 times less return on investment than Target 2055. But when comparing it to its historical volatility, Fidelity Freedom Blend is 1.04 times less risky than Target 2055. It trades about 0.09 of its potential returns per unit of risk. Target 2055 Fund is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,567 in Target 2055 Fund on September 12, 2024 and sell it today you would earn a total of 378.00 from holding Target 2055 Fund or generate 24.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Freedom Blend vs. Target 2055 Fund
Performance |
| Timeline |
| Fidelity Freedom Blend |
| Target 2055 Fund |
Fidelity Freedom and Target 2055 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Freedom and Target 2055
The main advantage of trading using opposite Fidelity Freedom and Target 2055 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Freedom position performs unexpectedly, Target 2055 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 Target 2055 will offset losses from the drop in Target 2055's long position.| Fidelity Freedom vs. Fidelity Freedom Blend | Fidelity Freedom vs. Fidelity Freedom Blend | Fidelity Freedom vs. Fidelity Freedom Blend | Fidelity Freedom vs. Fidelity Freedom Blend |
| Target 2055 vs. Virtus Multi Sector Short | Target 2055 vs. Blackrock Short Term Inflat Protected | Target 2055 vs. Lord Abbett Short | Target 2055 vs. Prudential Short Duration |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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