Correlation Between Fidelity Freedom and Fidelity Total
Can any of the company-specific risk be diversified away by investing in both Fidelity Freedom and Fidelity Total 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 Total 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 Total Bond, you can compare the effects of market volatilities on Fidelity Freedom and Fidelity Total 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 Total. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Freedom and Fidelity Total.
Diversification Opportunities for Fidelity Freedom and Fidelity Total
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Fidelity and Fidelity is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Freedom Index and Fidelity Total Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Total Bond 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 Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Total Bond has no effect on the direction of Fidelity Freedom i.e., Fidelity Freedom and Fidelity Total go up and down completely randomly.
Pair Corralation between Fidelity Freedom and Fidelity Total
Assuming the 90 days horizon Fidelity Freedom Index is expected to generate 1.66 times more return on investment than Fidelity Total. However, Fidelity Freedom is 1.66 times more volatile than Fidelity Total Bond. It trades about 0.28 of its potential returns per unit of risk. Fidelity Total Bond is currently generating about 0.11 per unit of risk. If you would invest 2,637 in Fidelity Freedom Index on September 3, 2024 and sell it today you would earn a total of 85.00 from holding Fidelity Freedom Index or generate 3.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Freedom Index vs. Fidelity Total Bond
Performance |
| Timeline |
| Fidelity Freedom Index |
| Fidelity Total Bond |
Fidelity Freedom and Fidelity Total Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Freedom and Fidelity Total
The main advantage of trading using opposite Fidelity Freedom and Fidelity Total positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Freedom position performs unexpectedly, Fidelity Total 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 Total will offset losses from the drop in Fidelity Total's long position.| Fidelity Freedom vs. T Rowe Price | Fidelity Freedom vs. Sentinel Small Pany | Fidelity Freedom vs. Jhancock Diversified Macro | Fidelity Freedom vs. Principal Lifetime Hybrid |
| Fidelity Total vs. Metropolitan West Total | Fidelity Total vs. Metropolitan West Total | Fidelity Total vs. Pimco Total Return | Fidelity Total vs. Total Return 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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