Correlation Between Fidelity Freedom and Kensington Managed
Can any of the company-specific risk be diversified away by investing in both Fidelity Freedom and Kensington Managed 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 Kensington Managed 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 Kensington Managed Income, you can compare the effects of market volatilities on Fidelity Freedom and Kensington Managed 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 Kensington Managed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Freedom and Kensington Managed.
Diversification Opportunities for Fidelity Freedom and Kensington Managed
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Fidelity and Kensington is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Freedom Index and Kensington Managed Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kensington Managed Income 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 Kensington Managed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kensington Managed Income has no effect on the direction of Fidelity Freedom i.e., Fidelity Freedom and Kensington Managed go up and down completely randomly.
Pair Corralation between Fidelity Freedom and Kensington Managed
Assuming the 90 days horizon Fidelity Freedom Index is expected to generate 4.42 times more return on investment than Kensington Managed. However, Fidelity Freedom is 4.42 times more volatile than Kensington Managed Income. It trades about 0.07 of its potential returns per unit of risk. Kensington Managed Income is currently generating about 0.1 per unit of risk. If you would invest 2,192 in Fidelity Freedom Index on November 28, 2024 and sell it today you would earn a total of 19.00 from holding Fidelity Freedom Index or generate 0.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Fidelity Freedom Index vs. Kensington Managed Income
Performance |
| Timeline |
| Fidelity Freedom Index |
| Kensington Managed Income |
Fidelity Freedom and Kensington Managed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Freedom and Kensington Managed
The main advantage of trading using opposite Fidelity Freedom and Kensington Managed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Freedom position performs unexpectedly, Kensington Managed 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 Kensington Managed will offset losses from the drop in Kensington Managed's long position.| Fidelity Freedom vs. Angel Oak Financial | Fidelity Freedom vs. Mesirow Financial Small | Fidelity Freedom vs. Goldman Sachs Financial | Fidelity Freedom vs. Gabelli Global Financial |
| Kensington Managed vs. Angel Oak Financial | Kensington Managed vs. Rmb Mendon Financial | Kensington Managed vs. Blackrock Financial Institutions | Kensington Managed vs. Fidelity Advisor Financial |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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