Correlation Between Fidelity Freedom and Global Technology
Can any of the company-specific risk be diversified away by investing in both Fidelity Freedom and Global Technology 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 Global Technology 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 Global Technology Portfolio, you can compare the effects of market volatilities on Fidelity Freedom and Global Technology 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 Global Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Freedom and Global Technology.
Diversification Opportunities for Fidelity Freedom and Global Technology
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Fidelity and Global is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Freedom Blend and Global Technology Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Technology 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 Global Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Technology has no effect on the direction of Fidelity Freedom i.e., Fidelity Freedom and Global Technology go up and down completely randomly.
Pair Corralation between Fidelity Freedom and Global Technology
Assuming the 90 days horizon Fidelity Freedom is expected to generate 5.44 times less return on investment than Global Technology. But when comparing it to its historical volatility, Fidelity Freedom Blend is 3.62 times less risky than Global Technology. It trades about 0.07 of its potential returns per unit of risk. Global Technology Portfolio is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,216 in Global Technology Portfolio on November 5, 2024 and sell it today you would earn a total of 944.00 from holding Global Technology Portfolio or generate 77.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Freedom Blend vs. Global Technology Portfolio
Performance |
| Timeline |
| Fidelity Freedom Blend |
| Global Technology |
Fidelity Freedom and Global Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Freedom and Global Technology
The main advantage of trading using opposite Fidelity Freedom and Global Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Freedom position performs unexpectedly, Global Technology 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 Global Technology will offset losses from the drop in Global Technology's long position.| Fidelity Freedom vs. Barings High Yield | Fidelity Freedom vs. Ab Bond Inflation | Fidelity Freedom vs. Old Westbury California | Fidelity Freedom vs. Goldman Sachs Short |
| Global Technology vs. Ambrus Core Bond | Global Technology vs. Ultra Short Fixed Income | Global Technology vs. Rationalpier 88 Convertible | Global Technology vs. Multisector Bond Sma |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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