Correlation Between Fidelity Freedom and Fidelity Pacific
Can any of the company-specific risk be diversified away by investing in both Fidelity Freedom and Fidelity Pacific 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 Pacific 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 Pacific Basin, you can compare the effects of market volatilities on Fidelity Freedom and Fidelity Pacific 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 Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Freedom and Fidelity Pacific.
Diversification Opportunities for Fidelity Freedom and Fidelity Pacific
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fidelity and Fidelity is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Freedom Index and Fidelity Pacific Basin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Pacific Basin 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 Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Pacific Basin has no effect on the direction of Fidelity Freedom i.e., Fidelity Freedom and Fidelity Pacific go up and down completely randomly.
Pair Corralation between Fidelity Freedom and Fidelity Pacific
Assuming the 90 days horizon Fidelity Freedom Index is expected to generate 0.48 times more return on investment than Fidelity Pacific. However, Fidelity Freedom Index is 2.08 times less risky than Fidelity Pacific. It trades about 0.08 of its potential returns per unit of risk. Fidelity Pacific Basin is currently generating about 0.03 per unit of risk. If you would invest 1,589 in Fidelity Freedom Index on November 1, 2024 and sell it today you would earn a total of 306.00 from holding Fidelity Freedom Index or generate 19.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Freedom Index vs. Fidelity Pacific Basin
Performance |
| Timeline |
| Fidelity Freedom Index |
| Fidelity Pacific Basin |
Fidelity Freedom and Fidelity Pacific Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Freedom and Fidelity Pacific
The main advantage of trading using opposite Fidelity Freedom and Fidelity Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Freedom position performs unexpectedly, Fidelity Pacific 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 Pacific will offset losses from the drop in Fidelity Pacific'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 Pacific vs. Fidelity Europe Fund | Fidelity Pacific vs. Fidelity Japan Fund | Fidelity Pacific vs. Fidelity Emerging Asia | Fidelity Pacific vs. Fidelity Nordic Fund |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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