Correlation Between Fidelity Freedom and Telecommunications
Can any of the company-specific risk be diversified away by investing in both Fidelity Freedom and Telecommunications 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 Telecommunications 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 Telecommunications Portfolio Fidelity, you can compare the effects of market volatilities on Fidelity Freedom and Telecommunications 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 Telecommunications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Freedom and Telecommunications.
Diversification Opportunities for Fidelity Freedom and Telecommunications
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fidelity and Telecommunications is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Freedom Index and Telecommunications Portfolio F in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telecommunications 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 Telecommunications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telecommunications has no effect on the direction of Fidelity Freedom i.e., Fidelity Freedom and Telecommunications go up and down completely randomly.
Pair Corralation between Fidelity Freedom and Telecommunications
Assuming the 90 days horizon Fidelity Freedom is expected to generate 5.19 times less return on investment than Telecommunications. But when comparing it to its historical volatility, Fidelity Freedom Index is 1.57 times less risky than Telecommunications. It trades about 0.09 of its potential returns per unit of risk. Telecommunications Portfolio Fidelity is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 5,441 in Telecommunications Portfolio Fidelity on August 30, 2024 and sell it today you would earn a total of 341.00 from holding Telecommunications Portfolio Fidelity or generate 6.27% 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. Telecommunications Portfolio F
Performance |
| Timeline |
| Fidelity Freedom Index |
| Telecommunications |
Fidelity Freedom and Telecommunications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Freedom and Telecommunications
The main advantage of trading using opposite Fidelity Freedom and Telecommunications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Freedom position performs unexpectedly, Telecommunications 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 Telecommunications will offset losses from the drop in Telecommunications' long position.| Fidelity Freedom vs. Touchstone Ultra Short | Fidelity Freedom vs. Jhancock Short Duration | Fidelity Freedom vs. Barings Active Short | Fidelity Freedom vs. Aqr Long Short Equity |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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