Correlation Between Smallcap Growth and Fidelity Freedom
Can any of the company-specific risk be diversified away by investing in both Smallcap Growth 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 Smallcap Growth and Fidelity Freedom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Smallcap Growth Fund and Fidelity Freedom Index, you can compare the effects of market volatilities on Smallcap Growth 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 Smallcap Growth with a short position of Fidelity Freedom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smallcap Growth and Fidelity Freedom.
Diversification Opportunities for Smallcap Growth and Fidelity Freedom
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Smallcap and Fidelity is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Smallcap Growth Fund 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 Smallcap Growth 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 Smallcap Growth Fund 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 Smallcap Growth i.e., Smallcap Growth and Fidelity Freedom go up and down completely randomly.
Pair Corralation between Smallcap Growth and Fidelity Freedom
Assuming the 90 days horizon Smallcap Growth Fund is expected to generate 1.82 times more return on investment than Fidelity Freedom. However, Smallcap Growth is 1.82 times more volatile than Fidelity Freedom Index. It trades about 0.07 of its potential returns per unit of risk. Fidelity Freedom Index is currently generating about 0.11 per unit of risk. If you would invest 1,371 in Smallcap Growth Fund on September 15, 2024 and sell it today you would earn a total of 306.00 from holding Smallcap Growth Fund or generate 22.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Smallcap Growth Fund vs. Fidelity Freedom Index
Performance |
| Timeline |
| Smallcap Growth |
| Fidelity Freedom Index |
Smallcap Growth and Fidelity Freedom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smallcap Growth and Fidelity Freedom
The main advantage of trading using opposite Smallcap Growth and Fidelity Freedom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smallcap Growth 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.| Smallcap Growth vs. Strategic Asset Management | Smallcap Growth vs. Strategic Asset Management | Smallcap Growth vs. Strategic Asset Management | Smallcap Growth vs. Strategic Asset Management |
| Fidelity Freedom vs. Vy Baron Growth | Fidelity Freedom vs. Mid Cap Growth | Fidelity Freedom vs. Smallcap Growth Fund | Fidelity Freedom vs. Champlain Mid Cap |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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