Correlation Between Fidelity Freedom and Fidelity Stock
Can any of the company-specific risk be diversified away by investing in both Fidelity Freedom and Fidelity Stock 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 Stock 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 Stock Selector, you can compare the effects of market volatilities on Fidelity Freedom and Fidelity Stock 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 Stock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Freedom and Fidelity Stock.
Diversification Opportunities for Fidelity Freedom and Fidelity Stock
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fidelity and Fidelity is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Freedom Index and Fidelity Stock Selector in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Stock Selector 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 Stock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Stock Selector has no effect on the direction of Fidelity Freedom i.e., Fidelity Freedom and Fidelity Stock go up and down completely randomly.
Pair Corralation between Fidelity Freedom and Fidelity Stock
Assuming the 90 days horizon Fidelity Freedom is expected to generate 1.13 times less return on investment than Fidelity Stock. But when comparing it to its historical volatility, Fidelity Freedom Index is 1.23 times less risky than Fidelity Stock. It trades about 0.07 of its potential returns per unit of risk. Fidelity Stock Selector is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 2,991 in Fidelity Stock Selector on September 13, 2024 and sell it today you would earn a total of 48.00 from holding Fidelity Stock Selector or generate 1.6% 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 Stock Selector
Performance |
| Timeline |
| Fidelity Freedom Index |
| Fidelity Stock Selector |
Fidelity Freedom and Fidelity Stock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Freedom and Fidelity Stock
The main advantage of trading using opposite Fidelity Freedom and Fidelity Stock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Freedom position performs unexpectedly, Fidelity Stock 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 Stock will offset losses from the drop in Fidelity Stock's long position.| Fidelity Freedom vs. Financials Ultrasector Profund | Fidelity Freedom vs. Prudential Jennison Financial | Fidelity Freedom vs. Vanguard Financials Index | Fidelity Freedom vs. 1919 Financial Services |
| Fidelity Stock vs. The Gabelli Healthcare | Fidelity Stock vs. Baillie Gifford Health | Fidelity Stock vs. Blackrock Health Sciences | Fidelity Stock vs. Deutsche Health And |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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