Correlation Between Fidelity Freedom and California Bond
Can any of the company-specific risk be diversified away by investing in both Fidelity Freedom and California Bond 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 California Bond into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Freedom Index and California Bond Fund, you can compare the effects of market volatilities on Fidelity Freedom and California Bond 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 California Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Freedom and California Bond.
Diversification Opportunities for Fidelity Freedom and California Bond
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Fidelity and California is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Freedom Index and California Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on California Bond 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 Index are associated (or correlated) with California Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of California Bond has no effect on the direction of Fidelity Freedom i.e., Fidelity Freedom and California Bond go up and down completely randomly.
Pair Corralation between Fidelity Freedom and California Bond
Assuming the 90 days horizon Fidelity Freedom Index is expected to generate 1.04 times more return on investment than California Bond. However, Fidelity Freedom is 1.04 times more volatile than California Bond Fund. It trades about 0.3 of its potential returns per unit of risk. California Bond Fund is currently generating about 0.19 per unit of risk. If you would invest 1,646 in Fidelity Freedom Index on September 4, 2024 and sell it today you would earn a total of 37.00 from holding Fidelity Freedom Index or generate 2.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Freedom Index vs. California Bond Fund
Performance |
| Timeline |
| Fidelity Freedom Index |
| California Bond |
Fidelity Freedom and California Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Freedom and California Bond
The main advantage of trading using opposite Fidelity Freedom and California Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Freedom position performs unexpectedly, California Bond 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 California Bond will offset losses from the drop in California Bond's long position.| Fidelity Freedom vs. Artisan Select Equity | Fidelity Freedom vs. Small Cap Equity | Fidelity Freedom vs. Gmo Global Equity | Fidelity Freedom vs. Nationwide Global Equity |
| California Bond vs. Goldman Sachs Growth | California Bond vs. Smallcap Growth Fund | California Bond vs. L Abbett Growth | California Bond vs. Small Pany Growth |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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