Correlation Between Fidelity Freedom and Energy Basic
Can any of the company-specific risk be diversified away by investing in both Fidelity Freedom and Energy Basic 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 Energy Basic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Freedom 2050 and Energy Basic Materials, you can compare the effects of market volatilities on Fidelity Freedom and Energy Basic 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 Energy Basic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Freedom and Energy Basic.
Diversification Opportunities for Fidelity Freedom and Energy Basic
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fidelity and Energy is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Freedom 2050 and Energy Basic Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energy Basic Materials 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 2050 are associated (or correlated) with Energy Basic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energy Basic Materials has no effect on the direction of Fidelity Freedom i.e., Fidelity Freedom and Energy Basic go up and down completely randomly.
Pair Corralation between Fidelity Freedom and Energy Basic
Assuming the 90 days horizon Fidelity Freedom 2050 is expected to generate 0.71 times more return on investment than Energy Basic. However, Fidelity Freedom 2050 is 1.4 times less risky than Energy Basic. It trades about 0.25 of its potential returns per unit of risk. Energy Basic Materials is currently generating about 0.11 per unit of risk. If you would invest 1,397 in Fidelity Freedom 2050 on September 4, 2024 and sell it today you would earn a total of 45.00 from holding Fidelity Freedom 2050 or generate 3.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Fidelity Freedom 2050 vs. Energy Basic Materials
Performance |
| Timeline |
| Fidelity Freedom 2050 |
| Energy Basic Materials |
Fidelity Freedom and Energy Basic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Freedom and Energy Basic
The main advantage of trading using opposite Fidelity Freedom and Energy Basic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Freedom position performs unexpectedly, Energy Basic 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 Energy Basic will offset losses from the drop in Energy Basic's long position.| Fidelity Freedom vs. Energy Basic Materials | Fidelity Freedom vs. Invesco Energy Fund | Fidelity Freedom vs. World Energy Fund | Fidelity Freedom vs. Energy Basic Materials |
| Energy Basic vs. Principal Lifetime Hybrid | Energy Basic vs. Delaware Limited Term Diversified | Energy Basic vs. Pgim Jennison Diversified | Energy Basic vs. Lord Abbett Diversified |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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