Correlation Between Fidelity Freedom and One Choice
Can any of the company-specific risk be diversified away by investing in both Fidelity Freedom and One Choice 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 One Choice 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 One Choice 2055, you can compare the effects of market volatilities on Fidelity Freedom and One Choice 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 One Choice. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Freedom and One Choice.
Diversification Opportunities for Fidelity Freedom and One Choice
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Fidelity and One is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Freedom Blend and One Choice 2055 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on One Choice 2055 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 One Choice. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of One Choice 2055 has no effect on the direction of Fidelity Freedom i.e., Fidelity Freedom and One Choice go up and down completely randomly.
Pair Corralation between Fidelity Freedom and One Choice
Assuming the 90 days horizon Fidelity Freedom Blend is expected to generate 0.8 times more return on investment than One Choice. However, Fidelity Freedom Blend is 1.25 times less risky than One Choice. It trades about 0.08 of its potential returns per unit of risk. One Choice 2055 is currently generating about 0.07 per unit of risk. If you would invest 941.00 in Fidelity Freedom Blend on September 4, 2024 and sell it today you would earn a total of 235.00 from holding Fidelity Freedom Blend or generate 24.97% 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. One Choice 2055
Performance |
| Timeline |
| Fidelity Freedom Blend |
| One Choice 2055 |
Fidelity Freedom and One Choice Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Freedom and One Choice
The main advantage of trading using opposite Fidelity Freedom and One Choice positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Freedom position performs unexpectedly, One Choice 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 One Choice will offset losses from the drop in One Choice'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 |
| One Choice vs. Mid Cap Value | One Choice vs. Equity Growth Fund | One Choice vs. Income Growth Fund | One Choice vs. Diversified Bond Fund |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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