Correlation Between Fidelity International and Fidelity Freedom
Can any of the company-specific risk be diversified away by investing in both Fidelity International 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 International 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 International Index and Fidelity Freedom Blend, you can compare the effects of market volatilities on Fidelity International 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 International with a short position of Fidelity Freedom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity International and Fidelity Freedom.
Diversification Opportunities for Fidelity International and Fidelity Freedom
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fidelity and Fidelity is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity International Index and Fidelity Freedom Blend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Freedom Blend and Fidelity International 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 International Index 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 Blend has no effect on the direction of Fidelity International i.e., Fidelity International and Fidelity Freedom go up and down completely randomly.
Pair Corralation between Fidelity International and Fidelity Freedom
Assuming the 90 days horizon Fidelity International is expected to generate 1.19 times less return on investment than Fidelity Freedom. In addition to that, Fidelity International is 1.33 times more volatile than Fidelity Freedom Blend. It trades about 0.05 of its total potential returns per unit of risk. Fidelity Freedom Blend is currently generating about 0.08 per unit of volatility. If you would invest 980.00 in Fidelity Freedom Blend on November 4, 2024 and sell it today you would earn a total of 237.00 from holding Fidelity Freedom Blend or generate 24.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity International Index vs. Fidelity Freedom Blend
Performance |
| Timeline |
| Fidelity International |
| Fidelity Freedom Blend |
Fidelity International and Fidelity Freedom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity International and Fidelity Freedom
The main advantage of trading using opposite Fidelity International and Fidelity Freedom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity International 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 International vs. Fidelity Emerging Markets | Fidelity International vs. Fidelity Small Cap | Fidelity International vs. Fidelity Bond Index | Fidelity International vs. Fidelity Mid Cap |
| Fidelity Freedom vs. Lord Abbett Small | Fidelity Freedom vs. Fpa Queens Road | Fidelity Freedom vs. Victory Rs Partners | Fidelity Freedom vs. Lsv Small Cap |
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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