Correlation Between Fidelity Freedom and Fidelity Worldwide
Can any of the company-specific risk be diversified away by investing in both Fidelity Freedom and Fidelity Worldwide 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 Worldwide 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 Worldwide Fund, you can compare the effects of market volatilities on Fidelity Freedom and Fidelity Worldwide 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 Worldwide. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Freedom and Fidelity Worldwide.
Diversification Opportunities for Fidelity Freedom and Fidelity Worldwide
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Fidelity and Fidelity is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Freedom Index and Fidelity Worldwide Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Worldwide 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 Worldwide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Worldwide has no effect on the direction of Fidelity Freedom i.e., Fidelity Freedom and Fidelity Worldwide go up and down completely randomly.
Pair Corralation between Fidelity Freedom and Fidelity Worldwide
Assuming the 90 days horizon Fidelity Freedom is expected to generate 1.39 times less return on investment than Fidelity Worldwide. But when comparing it to its historical volatility, Fidelity Freedom Index is 1.57 times less risky than Fidelity Worldwide. It trades about 0.09 of its potential returns per unit of risk. Fidelity Worldwide Fund is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 4,003 in Fidelity Worldwide Fund on August 30, 2024 and sell it today you would earn a total of 63.00 from holding Fidelity Worldwide Fund or generate 1.57% 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. Fidelity Worldwide Fund
Performance |
| Timeline |
| Fidelity Freedom Index |
| Fidelity Worldwide |
Fidelity Freedom and Fidelity Worldwide Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Freedom and Fidelity Worldwide
The main advantage of trading using opposite Fidelity Freedom and Fidelity Worldwide positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Freedom position performs unexpectedly, Fidelity Worldwide 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 Worldwide will offset losses from the drop in Fidelity Worldwide's long position.| Fidelity Freedom vs. Goldman Sachs Inflation | Fidelity Freedom vs. Aqr Managed Futures | Fidelity Freedom vs. Ab Bond Inflation | Fidelity Freedom vs. Ab Bond Inflation |
| Fidelity Worldwide vs. Fidelity Pacific Basin | Fidelity Worldwide vs. Fidelity Europe Fund | Fidelity Worldwide vs. Fidelity International Capital | Fidelity Worldwide vs. Fidelity Overseas Fund |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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