Correlation Between Fidelity Freedom and Aggressive Growth
Can any of the company-specific risk be diversified away by investing in both Fidelity Freedom and Aggressive Growth 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 Aggressive Growth 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 Aggressive Growth Allocation, you can compare the effects of market volatilities on Fidelity Freedom and Aggressive Growth 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 Aggressive Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Freedom and Aggressive Growth.
Diversification Opportunities for Fidelity Freedom and Aggressive Growth
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Fidelity and Aggressive is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Freedom Index and Aggressive Growth Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aggressive Growth 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 Aggressive Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aggressive Growth has no effect on the direction of Fidelity Freedom i.e., Fidelity Freedom and Aggressive Growth go up and down completely randomly.
Pair Corralation between Fidelity Freedom and Aggressive Growth
Assuming the 90 days horizon Fidelity Freedom is expected to generate 1.04 times less return on investment than Aggressive Growth. In addition to that, Fidelity Freedom is 1.04 times more volatile than Aggressive Growth Allocation. It trades about 0.09 of its total potential returns per unit of risk. Aggressive Growth Allocation is currently generating about 0.1 per unit of volatility. If you would invest 838.00 in Aggressive Growth Allocation on August 27, 2024 and sell it today you would earn a total of 322.00 from holding Aggressive Growth Allocation or generate 38.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Freedom Index vs. Aggressive Growth Allocation
Performance |
| Timeline |
| Fidelity Freedom Index |
| Aggressive Growth |
Fidelity Freedom and Aggressive Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Freedom and Aggressive Growth
The main advantage of trading using opposite Fidelity Freedom and Aggressive Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Freedom position performs unexpectedly, Aggressive Growth 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 Aggressive Growth will offset losses from the drop in Aggressive Growth's long position.| Fidelity Freedom vs. Fidelity Freedom 2015 | Fidelity Freedom vs. Fidelity Puritan Fund | Fidelity Freedom vs. Fidelity Puritan Fund | Fidelity Freedom vs. Fidelity Pennsylvania Municipal |
| Aggressive Growth vs. 1919 Financial Services | Aggressive Growth vs. Financials Ultrasector Profund | Aggressive Growth vs. Goldman Sachs Financial | Aggressive Growth vs. Prudential Jennison Financial |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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