Correlation Between Growth Allocation and Fidelity Freedom
Can any of the company-specific risk be diversified away by investing in both Growth Allocation 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 Growth Allocation and Fidelity Freedom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Growth Allocation Index and Fidelity Freedom Index, you can compare the effects of market volatilities on Growth Allocation 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 Growth Allocation with a short position of Fidelity Freedom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Growth Allocation and Fidelity Freedom.
Diversification Opportunities for Growth Allocation and Fidelity Freedom
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Growth and Fidelity is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Growth Allocation Index 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 Growth Allocation 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 Growth Allocation Index 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 Growth Allocation i.e., Growth Allocation and Fidelity Freedom go up and down completely randomly.
Pair Corralation between Growth Allocation and Fidelity Freedom
Assuming the 90 days horizon Growth Allocation Index is expected to generate 1.07 times more return on investment than Fidelity Freedom. However, Growth Allocation is 1.07 times more volatile than Fidelity Freedom Index. It trades about 0.11 of its potential returns per unit of risk. Fidelity Freedom Index is currently generating about 0.1 per unit of risk. If you would invest 906.00 in Growth Allocation Index on August 31, 2024 and sell it today you would earn a total of 224.00 from holding Growth Allocation Index or generate 24.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.73% |
| Values | Daily Returns |
Growth Allocation Index vs. Fidelity Freedom Index
Performance |
| Timeline |
| Growth Allocation Index |
| Fidelity Freedom Index |
Growth Allocation and Fidelity Freedom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Growth Allocation and Fidelity Freedom
The main advantage of trading using opposite Growth Allocation and Fidelity Freedom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Growth Allocation 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.| Growth Allocation vs. Growth Opportunities Fund | Growth Allocation vs. Eic Value Fund | Growth Allocation vs. Rbb Fund | Growth Allocation vs. Vanguard Small Cap Growth |
| Fidelity Freedom vs. T Rowe Price | Fidelity Freedom vs. HUMANA INC | Fidelity Freedom vs. Aquagold International | Fidelity Freedom vs. Barloworld Ltd ADR |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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