Correlation Between Microsoft and Fidelity Freedom
Can any of the company-specific risk be diversified away by investing in both Microsoft 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 Microsoft and Fidelity Freedom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Fidelity Freedom Index, you can compare the effects of market volatilities on Microsoft 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 Microsoft with a short position of Fidelity Freedom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Fidelity Freedom.
Diversification Opportunities for Microsoft and Fidelity Freedom
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Microsoft and Fidelity is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft 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 Microsoft 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 Microsoft 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 Microsoft i.e., Microsoft and Fidelity Freedom go up and down completely randomly.
Pair Corralation between Microsoft and Fidelity Freedom
Given the investment horizon of 90 days Microsoft is expected to under-perform the Fidelity Freedom. In addition to that, Microsoft is 4.04 times more volatile than Fidelity Freedom Index. It trades about -0.04 of its total potential returns per unit of risk. Fidelity Freedom Index is currently generating about 0.18 per unit of volatility. If you would invest 1,935 in Fidelity Freedom Index on August 31, 2024 and sell it today you would earn a total of 33.00 from holding Fidelity Freedom Index or generate 1.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Fidelity Freedom Index
Performance |
| Timeline |
| Microsoft |
| Fidelity Freedom Index |
Microsoft and Fidelity Freedom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Fidelity Freedom
The main advantage of trading using opposite Microsoft and Fidelity Freedom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft 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.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Fidelity Freedom vs. Fidelity Freedom Index | Fidelity Freedom vs. Fidelity Freedom Index | Fidelity Freedom vs. Fidelity Freedom Index | Fidelity Freedom vs. Fidelity Freedom Index |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
Other Complementary Tools
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format |