Correlation Between Fidelity Freedom and Fidelity Maryland
Can any of the company-specific risk be diversified away by investing in both Fidelity Freedom and Fidelity Maryland 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 Maryland 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 Maryland Municipal, you can compare the effects of market volatilities on Fidelity Freedom and Fidelity Maryland 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 Maryland. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Freedom and Fidelity Maryland.
Diversification Opportunities for Fidelity Freedom and Fidelity Maryland
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fidelity and Fidelity is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Freedom 2015 and Fidelity Maryland Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Maryland 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 Maryland. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Maryland has no effect on the direction of Fidelity Freedom i.e., Fidelity Freedom and Fidelity Maryland go up and down completely randomly.
Pair Corralation between Fidelity Freedom and Fidelity Maryland
Assuming the 90 days horizon Fidelity Freedom 2015 is expected to generate 1.8 times more return on investment than Fidelity Maryland. However, Fidelity Freedom is 1.8 times more volatile than Fidelity Maryland Municipal. It trades about 0.08 of its potential returns per unit of risk. Fidelity Maryland Municipal is currently generating about 0.06 per unit of risk. If you would invest 1,004 in Fidelity Freedom 2015 on August 26, 2024 and sell it today you would earn a total of 178.00 from holding Fidelity Freedom 2015 or generate 17.73% 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 Maryland Municipal
Performance |
| Timeline |
| Fidelity Freedom 2015 |
| Fidelity Maryland |
Fidelity Freedom and Fidelity Maryland Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Freedom and Fidelity Maryland
The main advantage of trading using opposite Fidelity Freedom and Fidelity Maryland positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Freedom position performs unexpectedly, Fidelity Maryland 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 Maryland will offset losses from the drop in Fidelity Maryland's long position.| Fidelity Freedom vs. Dreyfusstandish Global Fixed | Fidelity Freedom vs. Ab Global Bond | Fidelity Freedom vs. Rbb Fund Trust | Fidelity Freedom vs. Vanguard Global Credit |
| Fidelity Maryland vs. Fidelity Freedom 2015 | Fidelity Maryland vs. Fidelity Puritan Fund | Fidelity Maryland vs. Fidelity Puritan Fund | Fidelity Maryland 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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