Correlation Between Fidelity Freedom and Fidelity Global
Can any of the company-specific risk be diversified away by investing in both Fidelity Freedom and Fidelity Global 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 Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Freedom Index and Fidelity Global Equity, you can compare the effects of market volatilities on Fidelity Freedom and Fidelity Global 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 Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Freedom and Fidelity Global.
Diversification Opportunities for Fidelity Freedom and Fidelity Global
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Fidelity and Fidelity is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Freedom Index and Fidelity Global Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Global Equity 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 Index are associated (or correlated) with Fidelity Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Global Equity has no effect on the direction of Fidelity Freedom i.e., Fidelity Freedom and Fidelity Global go up and down completely randomly.
Pair Corralation between Fidelity Freedom and Fidelity Global
Assuming the 90 days horizon Fidelity Freedom is expected to generate 1.34 times less return on investment than Fidelity Global. But when comparing it to its historical volatility, Fidelity Freedom Index is 1.3 times less risky than Fidelity Global. It trades about 0.08 of its potential returns per unit of risk. Fidelity Global Equity is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,598 in Fidelity Global Equity on August 26, 2024 and sell it today you would earn a total of 477.00 from holding Fidelity Global Equity or generate 29.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Freedom Index vs. Fidelity Global Equity
Performance |
| Timeline |
| Fidelity Freedom Index |
| Fidelity Global Equity |
Fidelity Freedom and Fidelity Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Freedom and Fidelity Global
The main advantage of trading using opposite Fidelity Freedom and Fidelity Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Freedom position performs unexpectedly, Fidelity Global 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 Global will offset losses from the drop in Fidelity Global's long position.| Fidelity Freedom vs. Fidelity Freedom Index | Fidelity Freedom vs. Fidelity Freedom Index | Fidelity Freedom vs. Fidelity Freedom Index | Fidelity Freedom vs. Fidelity Freedom Index |
| Fidelity Global vs. Fidelity Emerging Markets | Fidelity Global vs. Fidelity Total International | Fidelity Global vs. Fidelity International Value | Fidelity Global vs. Aquagold International |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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