Correlation Between Fidelity Freedom and Versatile Bond
Can any of the company-specific risk be diversified away by investing in both Fidelity Freedom and Versatile Bond 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 Versatile Bond 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 Versatile Bond Portfolio, you can compare the effects of market volatilities on Fidelity Freedom and Versatile Bond 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 Versatile Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Freedom and Versatile Bond.
Diversification Opportunities for Fidelity Freedom and Versatile Bond
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fidelity and Versatile is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Freedom Index and Versatile Bond Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Versatile Bond Portfolio 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 Versatile Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Versatile Bond Portfolio has no effect on the direction of Fidelity Freedom i.e., Fidelity Freedom and Versatile Bond go up and down completely randomly.
Pair Corralation between Fidelity Freedom and Versatile Bond
Assuming the 90 days horizon Fidelity Freedom Index is expected to generate 5.52 times more return on investment than Versatile Bond. However, Fidelity Freedom is 5.52 times more volatile than Versatile Bond Portfolio. It trades about 0.12 of its potential returns per unit of risk. Versatile Bond Portfolio is currently generating about -0.03 per unit of risk. If you would invest 2,195 in Fidelity Freedom Index on August 31, 2024 and sell it today you would earn a total of 34.00 from holding Fidelity Freedom Index or generate 1.55% 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. Versatile Bond Portfolio
Performance |
| Timeline |
| Fidelity Freedom Index |
| Versatile Bond Portfolio |
Fidelity Freedom and Versatile Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Freedom and Versatile Bond
The main advantage of trading using opposite Fidelity Freedom and Versatile Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Freedom position performs unexpectedly, Versatile Bond 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 Versatile Bond will offset losses from the drop in Versatile Bond's long position.| Fidelity Freedom vs. Vanguard Target Retirement | Fidelity Freedom vs. American Funds 2055 | Fidelity Freedom vs. American Funds 2055 | Fidelity Freedom vs. American Funds 2055 |
| Versatile Bond vs. Biotechnology Ultrasector Profund | Versatile Bond vs. Biotechnology Fund Class | Versatile Bond vs. Global Technology Portfolio | Versatile Bond vs. Pgim Jennison Technology |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
Other Complementary Tools
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities |