Correlation Between Fidelity Freedom and Fidelity Trafund
Can any of the company-specific risk be diversified away by investing in both Fidelity Freedom and Fidelity Trafund 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 Trafund 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 Trafund Class, you can compare the effects of market volatilities on Fidelity Freedom and Fidelity Trafund 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 Trafund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Freedom and Fidelity Trafund.
Diversification Opportunities for Fidelity Freedom and Fidelity Trafund
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Fidelity and Fidelity is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Freedom 2015 and Fidelity Trafund Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Trafund Class 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 Trafund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Trafund Class has no effect on the direction of Fidelity Freedom i.e., Fidelity Freedom and Fidelity Trafund go up and down completely randomly.
Pair Corralation between Fidelity Freedom and Fidelity Trafund
Assuming the 90 days horizon Fidelity Freedom is expected to generate 2.52 times less return on investment than Fidelity Trafund. But when comparing it to its historical volatility, Fidelity Freedom 2015 is 2.5 times less risky than Fidelity Trafund. It trades about 0.12 of its potential returns per unit of risk. Fidelity Trafund Class is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,601 in Fidelity Trafund Class on September 14, 2024 and sell it today you would earn a total of 583.00 from holding Fidelity Trafund Class or generate 36.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.63% |
| Values | Daily Returns |
Fidelity Freedom 2015 vs. Fidelity Trafund Class
Performance |
| Timeline |
| Fidelity Freedom 2015 |
| Fidelity Trafund Class |
Fidelity Freedom and Fidelity Trafund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Freedom and Fidelity Trafund
The main advantage of trading using opposite Fidelity Freedom and Fidelity Trafund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Freedom position performs unexpectedly, Fidelity Trafund 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 Trafund will offset losses from the drop in Fidelity Trafund's long position.| Fidelity Freedom vs. General Money Market | Fidelity Freedom vs. Hsbc Treasury Money | Fidelity Freedom vs. John Hancock Money | Fidelity Freedom vs. Schwab Treasury Money |
| Fidelity Trafund vs. Fidelity Freedom 2015 | Fidelity Trafund vs. Fidelity Puritan Fund | Fidelity Trafund vs. Fidelity Puritan Fund | Fidelity Trafund vs. Fidelity Pennsylvania Municipal |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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