Correlation Between Fidelity Freedom and Wilshire 5000
Can any of the company-specific risk be diversified away by investing in both Fidelity Freedom and Wilshire 5000 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 Wilshire 5000 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 Wilshire 5000 Index, you can compare the effects of market volatilities on Fidelity Freedom and Wilshire 5000 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 Wilshire 5000. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Freedom and Wilshire 5000.
Diversification Opportunities for Fidelity Freedom and Wilshire 5000
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Fidelity and Wilshire is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Freedom Index and Wilshire 5000 Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wilshire 5000 Index 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 Wilshire 5000. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wilshire 5000 Index has no effect on the direction of Fidelity Freedom i.e., Fidelity Freedom and Wilshire 5000 go up and down completely randomly.
Pair Corralation between Fidelity Freedom and Wilshire 5000
Assuming the 90 days horizon Fidelity Freedom Index is expected to generate 0.83 times more return on investment than Wilshire 5000. However, Fidelity Freedom Index is 1.21 times less risky than Wilshire 5000. It trades about 0.13 of its potential returns per unit of risk. Wilshire 5000 Index is currently generating about 0.1 per unit of risk. If you would invest 2,172 in Fidelity Freedom Index on October 26, 2024 and sell it today you would earn a total of 38.00 from holding Fidelity Freedom Index or generate 1.75% 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. Wilshire 5000 Index
Performance |
| Timeline |
| Fidelity Freedom Index |
| Wilshire 5000 Index |
Fidelity Freedom and Wilshire 5000 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Freedom and Wilshire 5000
The main advantage of trading using opposite Fidelity Freedom and Wilshire 5000 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Freedom position performs unexpectedly, Wilshire 5000 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 Wilshire 5000 will offset losses from the drop in Wilshire 5000's long position.| Fidelity Freedom vs. Touchstone Small Cap | Fidelity Freedom vs. Ab Small Cap | Fidelity Freedom vs. Goldman Sachs Smallmid | Fidelity Freedom vs. Kinetics Small Cap |
| Wilshire 5000 vs. Wilshire 5000 Index | Wilshire 5000 vs. Schwab Total Stock | Wilshire 5000 vs. Vanguard Russell 3000 | Wilshire 5000 vs. iShares Russell 3000 |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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