Correlation Between Fidelity Freedom and Dimensional 2020
Can any of the company-specific risk be diversified away by investing in both Fidelity Freedom and Dimensional 2020 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 Dimensional 2020 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 Dimensional 2020 Target, you can compare the effects of market volatilities on Fidelity Freedom and Dimensional 2020 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 Dimensional 2020. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Freedom and Dimensional 2020.
Diversification Opportunities for Fidelity Freedom and Dimensional 2020
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between FIDELITY and Dimensional is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Freedom Index and Dimensional 2020 Target in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dimensional 2020 Target 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 Dimensional 2020. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dimensional 2020 Target has no effect on the direction of Fidelity Freedom i.e., Fidelity Freedom and Dimensional 2020 go up and down completely randomly.
Pair Corralation between Fidelity Freedom and Dimensional 2020
Assuming the 90 days horizon Fidelity Freedom Index is expected to generate 0.94 times more return on investment than Dimensional 2020. However, Fidelity Freedom Index is 1.06 times less risky than Dimensional 2020. It trades about 0.13 of its potential returns per unit of risk. Dimensional 2020 Target is currently generating about 0.11 per unit of risk. If you would invest 1,428 in Fidelity Freedom Index on September 1, 2024 and sell it today you would earn a total of 83.00 from holding Fidelity Freedom Index or generate 5.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Freedom Index vs. Dimensional 2020 Target
Performance |
| Timeline |
| Fidelity Freedom Index |
| Dimensional 2020 Target |
Fidelity Freedom and Dimensional 2020 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Freedom and Dimensional 2020
The main advantage of trading using opposite Fidelity Freedom and Dimensional 2020 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Freedom position performs unexpectedly, Dimensional 2020 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 Dimensional 2020 will offset losses from the drop in Dimensional 2020's long position.| Fidelity Freedom vs. Fidelity Freedom 2015 | Fidelity Freedom vs. Fidelity Puritan Fund | Fidelity Freedom vs. Fidelity Puritan Fund | Fidelity Freedom vs. Fidelity Pennsylvania Municipal |
| Dimensional 2020 vs. Intal High Relative | Dimensional 2020 vs. Dfa International | Dimensional 2020 vs. Dfa Inflation Protected | Dimensional 2020 vs. Dfa International Small |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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