Correlation Between NYSE Composite and Fidelity Freedom
Can any of the company-specific risk be diversified away by investing in both NYSE Composite 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 NYSE Composite and Fidelity Freedom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Fidelity Freedom Index, you can compare the effects of market volatilities on NYSE Composite 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 NYSE Composite with a short position of Fidelity Freedom. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Fidelity Freedom.
Diversification Opportunities for NYSE Composite and Fidelity Freedom
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NYSE and Fidelity is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite 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 NYSE Composite 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 NYSE Composite 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 NYSE Composite i.e., NYSE Composite and Fidelity Freedom go up and down completely randomly.
Pair Corralation between NYSE Composite and Fidelity Freedom
Assuming the 90 days trading horizon NYSE Composite is expected to generate 1.3 times more return on investment than Fidelity Freedom. However, NYSE Composite is 1.3 times more volatile than Fidelity Freedom Index. It trades about 0.11 of its potential returns per unit of risk. Fidelity Freedom Index is currently generating about 0.1 per unit of risk. If you would invest 1,550,264 in NYSE Composite on August 31, 2024 and sell it today you would earn a total of 476,940 from holding NYSE Composite or generate 30.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Fidelity Freedom Index
Performance |
| Timeline |
NYSE Composite and Fidelity Freedom Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Fidelity Freedom Index
Pair trading matchups for Fidelity Freedom
Pair Trading with NYSE Composite and Fidelity Freedom
The main advantage of trading using opposite NYSE Composite and Fidelity Freedom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite 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.| NYSE Composite vs. Nextplat Corp | NYSE Composite vs. Qualys Inc | NYSE Composite vs. Cadence Design Systems | NYSE Composite vs. Asure Software |
| Fidelity Freedom vs. T Rowe Price | Fidelity Freedom vs. HUMANA INC | Fidelity Freedom vs. Aquagold International | Fidelity Freedom vs. Barloworld Ltd ADR |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
Other Complementary Tools
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal |