Correlation Between Kinetics Small and Fidelity Freedom
Can any of the company-specific risk be diversified away by investing in both Kinetics Small 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 Kinetics Small and Fidelity Freedom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kinetics Small Cap and Fidelity Freedom Index, you can compare the effects of market volatilities on Kinetics Small 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 Kinetics Small with a short position of Fidelity Freedom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinetics Small and Fidelity Freedom.
Diversification Opportunities for Kinetics Small and Fidelity Freedom
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Kinetics and Fidelity is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Small 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 Kinetics Small 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 Kinetics Small 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 Kinetics Small i.e., Kinetics Small and Fidelity Freedom go up and down completely randomly.
Pair Corralation between Kinetics Small and Fidelity Freedom
Assuming the 90 days horizon Kinetics Small Cap is expected to generate 3.42 times more return on investment than Fidelity Freedom. However, Kinetics Small is 3.42 times more volatile than Fidelity Freedom Index. It trades about 0.16 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 13,235 in Kinetics Small Cap on September 15, 2024 and sell it today you would earn a total of 5,771 from holding Kinetics Small Cap or generate 43.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kinetics Small Cap vs. Fidelity Freedom Index
Performance |
| Timeline |
| Kinetics Small Cap |
| Fidelity Freedom Index |
Kinetics Small and Fidelity Freedom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kinetics Small and Fidelity Freedom
The main advantage of trading using opposite Kinetics Small and Fidelity Freedom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinetics Small 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.| Kinetics Small vs. Touchstone Large Cap | Kinetics Small vs. Lord Abbett Affiliated | Kinetics Small vs. Large Cap Growth Profund | Kinetics Small vs. American Mutual Fund |
| 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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