Correlation Between Fidelity Freedom and Fidelity International
Can any of the company-specific risk be diversified away by investing in both Fidelity Freedom and Fidelity International 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 International 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 International Real, you can compare the effects of market volatilities on Fidelity Freedom and Fidelity International 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 International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Freedom and Fidelity International.
Diversification Opportunities for Fidelity Freedom and Fidelity International
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fidelity and Fidelity is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Freedom 2015 and Fidelity International Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity International 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 International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity International has no effect on the direction of Fidelity Freedom i.e., Fidelity Freedom and Fidelity International go up and down completely randomly.
Pair Corralation between Fidelity Freedom and Fidelity International
Assuming the 90 days horizon Fidelity Freedom 2015 is expected to generate 0.48 times more return on investment than Fidelity International. However, Fidelity Freedom 2015 is 2.06 times less risky than Fidelity International. It trades about 0.06 of its potential returns per unit of risk. Fidelity International Real is currently generating about -0.13 per unit of risk. If you would invest 1,176 in Fidelity Freedom 2015 on August 31, 2024 and sell it today you would earn a total of 14.00 from holding Fidelity Freedom 2015 or generate 1.19% 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 International Real
Performance |
| Timeline |
| Fidelity Freedom 2015 |
| Fidelity International |
Fidelity Freedom and Fidelity International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Freedom and Fidelity International
The main advantage of trading using opposite Fidelity Freedom and Fidelity International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Freedom position performs unexpectedly, Fidelity International 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 International will offset losses from the drop in Fidelity International'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 |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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