Correlation Between Fidelity Freedom and Fidelity Asset
Can any of the company-specific risk be diversified away by investing in both Fidelity Freedom and Fidelity Asset 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 Fidelity Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Freedom 2015 and Fidelity Asset Manager, you can compare the effects of market volatilities on Fidelity Freedom and Fidelity Asset 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 Fidelity Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Freedom and Fidelity Asset.
Diversification Opportunities for Fidelity Freedom and Fidelity Asset
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fidelity and Fidelity is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Freedom 2015 and Fidelity Asset Manager in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Asset Manager 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 2015 are associated (or correlated) with Fidelity Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Asset Manager has no effect on the direction of Fidelity Freedom i.e., Fidelity Freedom and Fidelity Asset go up and down completely randomly.
Pair Corralation between Fidelity Freedom and Fidelity Asset
Assuming the 90 days horizon Fidelity Freedom is expected to generate 1.67 times less return on investment than Fidelity Asset. But when comparing it to its historical volatility, Fidelity Freedom 2015 is 1.11 times less risky than Fidelity Asset. It trades about 0.14 of its potential returns per unit of risk. Fidelity Asset Manager is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 2,102 in Fidelity Asset Manager on August 31, 2024 and sell it today you would earn a total of 42.00 from holding Fidelity Asset Manager or generate 2.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Freedom 2015 vs. Fidelity Asset Manager
Performance |
| Timeline |
| Fidelity Freedom 2015 |
| Fidelity Asset Manager |
Fidelity Freedom and Fidelity Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Freedom and Fidelity Asset
The main advantage of trading using opposite Fidelity Freedom and Fidelity Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Freedom position performs unexpectedly, Fidelity Asset 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 Fidelity Asset will offset losses from the drop in Fidelity Asset's long position.| Fidelity Freedom vs. Siit High Yield | Fidelity Freedom vs. Blackrock High Yield | Fidelity Freedom vs. Western Asset High | Fidelity Freedom vs. American Century High |
| Fidelity Asset vs. Fidelity Asset Manager | Fidelity Asset vs. Fidelity Asset Manager | Fidelity Asset vs. Fidelity Growth Income | Fidelity Asset vs. Fidelity Equity Dividend |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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