Correlation Between Guidemark Smallmid and Fidelity Freedom
Can any of the company-specific risk be diversified away by investing in both Guidemark Smallmid 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 Guidemark Smallmid and Fidelity Freedom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Guidemark Smallmid Cap and Fidelity Freedom Index, you can compare the effects of market volatilities on Guidemark Smallmid 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 Guidemark Smallmid with a short position of Fidelity Freedom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guidemark Smallmid and Fidelity Freedom.
Diversification Opportunities for Guidemark Smallmid and Fidelity Freedom
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Guidemark and Fidelity is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Guidemark Smallmid Cap and Fidelity Freedom Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Freedom Index and Guidemark Smallmid 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 Guidemark Smallmid Cap 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 Index has no effect on the direction of Guidemark Smallmid i.e., Guidemark Smallmid and Fidelity Freedom go up and down completely randomly.
Pair Corralation between Guidemark Smallmid and Fidelity Freedom
Assuming the 90 days horizon Guidemark Smallmid Cap is expected to generate 2.16 times more return on investment than Fidelity Freedom. However, Guidemark Smallmid is 2.16 times more volatile than Fidelity Freedom Index. It trades about 0.1 of its potential returns per unit of risk. Fidelity Freedom Index is currently generating about 0.09 per unit of risk. If you would invest 1,940 in Guidemark Smallmid Cap on September 15, 2024 and sell it today you would earn a total of 310.00 from holding Guidemark Smallmid Cap or generate 15.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guidemark Smallmid Cap vs. Fidelity Freedom Index
Performance |
| Timeline |
| Guidemark Smallmid Cap |
| Fidelity Freedom Index |
Guidemark Smallmid and Fidelity Freedom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guidemark Smallmid and Fidelity Freedom
The main advantage of trading using opposite Guidemark Smallmid and Fidelity Freedom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guidemark Smallmid 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.| Guidemark Smallmid vs. Guidemark E Fixed | Guidemark Smallmid vs. Guidemark Large Cap | Guidemark Smallmid vs. Guidemark Large Cap | Guidemark Smallmid vs. Guidemark World Ex Us |
| Fidelity Freedom vs. Blackrock Exchange Portfolio | Fidelity Freedom vs. Edward Jones Money | Fidelity Freedom vs. Money Market Obligations | Fidelity Freedom vs. Elfun Government Money |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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