Correlation Between Fidelity Freedom and Growth Allocation
Can any of the company-specific risk be diversified away by investing in both Fidelity Freedom and Growth Allocation 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 Growth Allocation 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 Growth Allocation Index, you can compare the effects of market volatilities on Fidelity Freedom and Growth Allocation 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 Growth Allocation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Freedom and Growth Allocation.
Diversification Opportunities for Fidelity Freedom and Growth Allocation
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Fidelity and Growth is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Freedom Index and Growth Allocation Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Growth Allocation Index 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 Growth Allocation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Growth Allocation Index has no effect on the direction of Fidelity Freedom i.e., Fidelity Freedom and Growth Allocation go up and down completely randomly.
Pair Corralation between Fidelity Freedom and Growth Allocation
Assuming the 90 days horizon Fidelity Freedom is expected to generate 1.42 times less return on investment than Growth Allocation. In addition to that, Fidelity Freedom is 1.21 times more volatile than Growth Allocation Index. It trades about 0.05 of its total potential returns per unit of risk. Growth Allocation Index is currently generating about 0.09 per unit of volatility. If you would invest 1,113 in Growth Allocation Index on August 27, 2024 and sell it today you would earn a total of 11.00 from holding Growth Allocation Index or generate 0.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Freedom Index vs. Growth Allocation Index
Performance |
| Timeline |
| Fidelity Freedom Index |
| Growth Allocation Index |
Fidelity Freedom and Growth Allocation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Freedom and Growth Allocation
The main advantage of trading using opposite Fidelity Freedom and Growth Allocation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Freedom position performs unexpectedly, Growth Allocation 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 Growth Allocation will offset losses from the drop in Growth Allocation'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 |
| Growth Allocation vs. Fidelity Freedom 2015 | Growth Allocation vs. Fidelity Puritan Fund | Growth Allocation vs. Fidelity Puritan Fund | Growth Allocation vs. Fidelity Pennsylvania Municipal |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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