Correlation Between Fidelity Freedom and Fidelity Emerging
Can any of the company-specific risk be diversified away by investing in both Fidelity Freedom and Fidelity Emerging 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 Emerging 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 Emerging Markets, you can compare the effects of market volatilities on Fidelity Freedom and Fidelity Emerging 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 Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Freedom and Fidelity Emerging.
Diversification Opportunities for Fidelity Freedom and Fidelity Emerging
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fidelity and Fidelity is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Freedom 2015 and Fidelity Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Emerging Markets 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 Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Emerging Markets has no effect on the direction of Fidelity Freedom i.e., Fidelity Freedom and Fidelity Emerging go up and down completely randomly.
Pair Corralation between Fidelity Freedom and Fidelity Emerging
Assuming the 90 days horizon Fidelity Freedom 2015 is expected to under-perform the Fidelity Emerging. In addition to that, Fidelity Freedom is 1.05 times more volatile than Fidelity Emerging Markets. It trades about -0.34 of its total potential returns per unit of risk. Fidelity Emerging Markets is currently generating about -0.22 per unit of volatility. If you would invest 4,026 in Fidelity Emerging Markets on October 9, 2024 and sell it today you would lose (132.00) from holding Fidelity Emerging Markets or give up 3.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Freedom 2015 vs. Fidelity Emerging Markets
Performance |
| Timeline |
| Fidelity Freedom 2015 |
| Fidelity Emerging Markets |
Fidelity Freedom and Fidelity Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Freedom and Fidelity Emerging
The main advantage of trading using opposite Fidelity Freedom and Fidelity Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Freedom position performs unexpectedly, Fidelity Emerging 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 Emerging will offset losses from the drop in Fidelity Emerging's long position.| Fidelity Freedom vs. Intermediate Government Bond | Fidelity Freedom vs. American Funds Government | Fidelity Freedom vs. Us Government Securities | Fidelity Freedom vs. Prudential Government Money |
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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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