Correlation Between Fidelity Freedom and Fidelity Emerging
Can any of the company-specific risk be diversified away by investing in both Fidelity Freedom and Fidelity Emerging 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 Emerging 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 Emerging Markets, you can compare the effects of market volatilities on Fidelity Freedom and Fidelity Emerging 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 Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Freedom and Fidelity Emerging.
Diversification Opportunities for Fidelity Freedom and Fidelity Emerging
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fidelity and Fidelity is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Freedom Index and Fidelity Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Emerging Markets 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 Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Emerging Markets has no effect on the direction of Fidelity Freedom i.e., Fidelity Freedom and Fidelity Emerging go up and down completely randomly.
Pair Corralation between Fidelity Freedom and Fidelity Emerging
Assuming the 90 days horizon Fidelity Freedom Index is expected to generate 0.79 times more return on investment than Fidelity Emerging. However, Fidelity Freedom Index is 1.27 times less risky than Fidelity Emerging. It trades about 0.1 of its potential returns per unit of risk. Fidelity Emerging Markets is currently generating about 0.03 per unit of risk. If you would invest 1,981 in Fidelity Freedom Index on August 28, 2024 and sell it today you would earn a total of 714.00 from holding Fidelity Freedom Index or generate 36.04% 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 Emerging Markets
Performance |
| Timeline |
| Fidelity Freedom Index |
| Fidelity Emerging Markets |
Fidelity Freedom and Fidelity Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Freedom and Fidelity Emerging
The main advantage of trading using opposite Fidelity Freedom and Fidelity Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Freedom position performs unexpectedly, Fidelity Emerging 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 Emerging will offset losses from the drop in Fidelity Emerging's long position.| Fidelity Freedom vs. Baird Strategic Municipal | Fidelity Freedom vs. Transamerica Intermediate Muni | Fidelity Freedom vs. T Rowe Price | Fidelity Freedom vs. Morningstar Municipal Bond |
| Fidelity Emerging vs. Fidelity International Index | Fidelity Emerging vs. Fidelity Real Estate | Fidelity Emerging vs. Fidelity Intermediate Treasury | Fidelity Emerging vs. Fidelity Inflation Protected Bond |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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