Correlation Between Fidelity Freedom and Fidelity Sai
Can any of the company-specific risk be diversified away by investing in both Fidelity Freedom and Fidelity Sai 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 Sai 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 Sai Treasury, you can compare the effects of market volatilities on Fidelity Freedom and Fidelity Sai 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 Sai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Freedom and Fidelity Sai.
Diversification Opportunities for Fidelity Freedom and Fidelity Sai
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fidelity and Fidelity is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Freedom Index and Fidelity Sai Treasury in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Sai Treasury 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 Sai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Sai Treasury has no effect on the direction of Fidelity Freedom i.e., Fidelity Freedom and Fidelity Sai go up and down completely randomly.
Pair Corralation between Fidelity Freedom and Fidelity Sai
Assuming the 90 days horizon Fidelity Freedom Index is expected to generate 2.7 times more return on investment than Fidelity Sai. However, Fidelity Freedom is 2.7 times more volatile than Fidelity Sai Treasury. It trades about 0.16 of its potential returns per unit of risk. Fidelity Sai Treasury is currently generating about 0.09 per unit of risk. If you would invest 2,611 in Fidelity Freedom Index on November 4, 2024 and sell it today you would earn a total of 60.00 from holding Fidelity Freedom Index or generate 2.3% 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 Sai Treasury
Performance |
| Timeline |
| Fidelity Freedom Index |
| Fidelity Sai Treasury |
Fidelity Freedom and Fidelity Sai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Freedom and Fidelity Sai
The main advantage of trading using opposite Fidelity Freedom and Fidelity Sai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Freedom position performs unexpectedly, Fidelity Sai 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 Sai will offset losses from the drop in Fidelity Sai's long position.| Fidelity Freedom vs. Gabelli Global Financial | Fidelity Freedom vs. Mesirow Financial Small | Fidelity Freedom vs. Icon Financial Fund | Fidelity Freedom vs. John Hancock Financial |
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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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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