Correlation Between Fidelity Freedom and Fidelity Series
Can any of the company-specific risk be diversified away by investing in both Fidelity Freedom and Fidelity Series 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 Series 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 Series Government, you can compare the effects of market volatilities on Fidelity Freedom and Fidelity Series 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 Series. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Freedom and Fidelity Series.
Diversification Opportunities for Fidelity Freedom and Fidelity Series
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Fidelity and Fidelity is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Freedom 2015 and Fidelity Series Government in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Series Gove 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 Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Series Gove has no effect on the direction of Fidelity Freedom i.e., Fidelity Freedom and Fidelity Series go up and down completely randomly.
Pair Corralation between Fidelity Freedom and Fidelity Series
Assuming the 90 days horizon Fidelity Freedom 2015 is expected to generate 1.61 times more return on investment than Fidelity Series. However, Fidelity Freedom is 1.61 times more volatile than Fidelity Series Government. It trades about 0.22 of its potential returns per unit of risk. Fidelity Series Government is currently generating about 0.02 per unit of risk. If you would invest 1,134 in Fidelity Freedom 2015 on November 3, 2024 and sell it today you would earn a total of 21.00 from holding Fidelity Freedom 2015 or generate 1.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Freedom 2015 vs. Fidelity Series Government
Performance |
| Timeline |
| Fidelity Freedom 2015 |
| Fidelity Series Gove |
Fidelity Freedom and Fidelity Series Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Freedom and Fidelity Series
The main advantage of trading using opposite Fidelity Freedom and Fidelity Series positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Freedom position performs unexpectedly, Fidelity Series 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 Series will offset losses from the drop in Fidelity Series' long position.| Fidelity Freedom vs. Glg Intl Small | Fidelity Freedom vs. Intal High Relative | Fidelity Freedom vs. Federated Emerging Market | Fidelity Freedom vs. Scharf Global Opportunity |
| Fidelity Series vs. Smallcap World Fund | Fidelity Series vs. Small Cap Equity | Fidelity Series vs. Us Vector Equity | Fidelity Series vs. Gmo Global Equity |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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