Correlation Between Fidelity Freedom and Fidelity Strategic
Can any of the company-specific risk be diversified away by investing in both Fidelity Freedom and Fidelity Strategic 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 Strategic 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 Strategic Dividend, you can compare the effects of market volatilities on Fidelity Freedom and Fidelity Strategic 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 Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Freedom and Fidelity Strategic.
Diversification Opportunities for Fidelity Freedom and Fidelity Strategic
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fidelity and Fidelity is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Freedom Index and Fidelity Strategic Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Strategic 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 Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Strategic has no effect on the direction of Fidelity Freedom i.e., Fidelity Freedom and Fidelity Strategic go up and down completely randomly.
Pair Corralation between Fidelity Freedom and Fidelity Strategic
Assuming the 90 days horizon Fidelity Freedom is expected to generate 1.2 times less return on investment than Fidelity Strategic. But when comparing it to its historical volatility, Fidelity Freedom Index is 1.17 times less risky than Fidelity Strategic. It trades about 0.13 of its potential returns per unit of risk. Fidelity Strategic Dividend is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,548 in Fidelity Strategic Dividend on September 2, 2024 and sell it today you would earn a total of 290.00 from holding Fidelity Strategic Dividend or generate 18.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Freedom Index vs. Fidelity Strategic Dividend
Performance |
| Timeline |
| Fidelity Freedom Index |
| Fidelity Strategic |
Fidelity Freedom and Fidelity Strategic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Freedom and Fidelity Strategic
The main advantage of trading using opposite Fidelity Freedom and Fidelity Strategic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Freedom position performs unexpectedly, Fidelity Strategic 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 Strategic will offset losses from the drop in Fidelity Strategic'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 Strategic vs. Fidelity Mega Cap | Fidelity Strategic vs. Fidelity Real Estate | Fidelity Strategic vs. Fidelity Capital Income | Fidelity Strategic vs. Fidelity Total Bond |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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