Correlation Between Aggressive Growth and Fidelity Freedom
Can any of the company-specific risk be diversified away by investing in both Aggressive Growth and Fidelity Freedom 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 Aggressive Growth and Fidelity Freedom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aggressive Growth Allocation and Fidelity Freedom Index, you can compare the effects of market volatilities on Aggressive Growth and Fidelity Freedom 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 Aggressive Growth with a short position of Fidelity Freedom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aggressive Growth and Fidelity Freedom.
Diversification Opportunities for Aggressive Growth and Fidelity Freedom
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Aggressive and Fidelity is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Aggressive Growth Allocation and Fidelity Freedom Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Freedom Index and Aggressive Growth 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 Aggressive Growth Allocation are associated (or correlated) with Fidelity Freedom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Freedom Index has no effect on the direction of Aggressive Growth i.e., Aggressive Growth and Fidelity Freedom go up and down completely randomly.
Pair Corralation between Aggressive Growth and Fidelity Freedom
Assuming the 90 days horizon Aggressive Growth Allocation is expected to under-perform the Fidelity Freedom. But the mutual fund apears to be less risky and, when comparing its historical volatility, Aggressive Growth Allocation is 1.03 times less risky than Fidelity Freedom. The mutual fund trades about -0.11 of its potential returns per unit of risk. The Fidelity Freedom Index is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest 2,650 in Fidelity Freedom Index on January 23, 2025 and sell it today you would lose (149.00) from holding Fidelity Freedom Index or give up 5.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aggressive Growth Allocation vs. Fidelity Freedom Index
Performance |
| Timeline |
| Aggressive Growth |
| Fidelity Freedom Index |
Aggressive Growth and Fidelity Freedom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aggressive Growth and Fidelity Freedom
The main advantage of trading using opposite Aggressive Growth and Fidelity Freedom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aggressive Growth position performs unexpectedly, Fidelity Freedom 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 Freedom will offset losses from the drop in Fidelity Freedom's long position.| Aggressive Growth vs. Rbb Fund | Aggressive Growth vs. Western Asset New | Aggressive Growth vs. Principal Lifetime Hybrid | Aggressive Growth vs. Arrow Dwa Balanced |
| Fidelity Freedom vs. Virtus Seix Government | Fidelity Freedom vs. Elfun Government Money | Fidelity Freedom vs. Columbia Government Mortgage | Fidelity Freedom vs. Dreyfus Government Cash |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
Other Complementary Tools
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets |