Correlation Between Fidelity Managed and Fidelity Freedom
Can any of the company-specific risk be diversified away by investing in both Fidelity Managed and Fidelity Freedom 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 Managed and Fidelity Freedom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Managed Retirement and Fidelity Freedom Index, you can compare the effects of market volatilities on Fidelity Managed and Fidelity Freedom 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 Managed with a short position of Fidelity Freedom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Managed and Fidelity Freedom.
Diversification Opportunities for Fidelity Managed and Fidelity Freedom
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fidelity and Fidelity is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Managed Retirement and Fidelity Freedom Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Freedom Index and Fidelity Managed 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 Managed Retirement are associated (or correlated) with Fidelity Freedom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Freedom Index has no effect on the direction of Fidelity Managed i.e., Fidelity Managed and Fidelity Freedom go up and down completely randomly.
Pair Corralation between Fidelity Managed and Fidelity Freedom
Assuming the 90 days horizon Fidelity Managed is expected to generate 1.83 times less return on investment than Fidelity Freedom. But when comparing it to its historical volatility, Fidelity Managed Retirement is 1.6 times less risky than Fidelity Freedom. It trades about 0.09 of its potential returns per unit of risk. Fidelity Freedom Index is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,766 in Fidelity Freedom Index on August 31, 2024 and sell it today you would earn a total of 357.00 from holding Fidelity Freedom Index or generate 20.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.73% |
| Values | Daily Returns |
Fidelity Managed Retirement vs. Fidelity Freedom Index
Performance |
| Timeline |
| Fidelity Managed Ret |
| Fidelity Freedom Index |
Fidelity Managed and Fidelity Freedom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Managed and Fidelity Freedom
The main advantage of trading using opposite Fidelity Managed and Fidelity Freedom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Managed position performs unexpectedly, Fidelity Freedom 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 Freedom will offset losses from the drop in Fidelity Freedom's long position.| Fidelity Managed vs. Ambrus Core Bond | Fidelity Managed vs. Blrc Sgy Mnp | Fidelity Managed vs. Transamerica Intermediate Muni | Fidelity Managed vs. Ab Bond Inflation |
| Fidelity Freedom vs. T Rowe Price | Fidelity Freedom vs. HUMANA INC | Fidelity Freedom vs. Aquagold International | Fidelity Freedom vs. Barloworld Ltd ADR |
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 Stocks Directory module to find actively traded stocks across global markets.
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