Correlation Between Versatile Bond and Fidelity Freedom
Can any of the company-specific risk be diversified away by investing in both Versatile Bond 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 Versatile Bond and Fidelity Freedom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Versatile Bond Portfolio and Fidelity Freedom 2035, you can compare the effects of market volatilities on Versatile Bond 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 Versatile Bond with a short position of Fidelity Freedom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Versatile Bond and Fidelity Freedom.
Diversification Opportunities for Versatile Bond and Fidelity Freedom
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Versatile and Fidelity is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Versatile Bond Portfolio and Fidelity Freedom 2035 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Freedom 2035 and Versatile Bond 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 Versatile Bond Portfolio 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 2035 has no effect on the direction of Versatile Bond i.e., Versatile Bond and Fidelity Freedom go up and down completely randomly.
Pair Corralation between Versatile Bond and Fidelity Freedom
Assuming the 90 days horizon Versatile Bond is expected to generate 8.6 times less return on investment than Fidelity Freedom. But when comparing it to its historical volatility, Versatile Bond Portfolio is 3.91 times less risky than Fidelity Freedom. It trades about 0.12 of its potential returns per unit of risk. Fidelity Freedom 2035 is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 1,608 in Fidelity Freedom 2035 on September 1, 2024 and sell it today you would earn a total of 44.00 from holding Fidelity Freedom 2035 or generate 2.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Versatile Bond Portfolio vs. Fidelity Freedom 2035
Performance |
| Timeline |
| Versatile Bond Portfolio |
| Fidelity Freedom 2035 |
Versatile Bond and Fidelity Freedom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Versatile Bond and Fidelity Freedom
The main advantage of trading using opposite Versatile Bond and Fidelity Freedom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Versatile Bond 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.| Versatile Bond vs. Short Term Treasury Portfolio | Versatile Bond vs. Aggressive Growth Portfolio | Versatile Bond vs. Permanent Portfolio Class | Versatile Bond vs. Thompson Bond Fund |
| Fidelity Freedom vs. Versatile Bond Portfolio | Fidelity Freedom vs. Ultra Short Fixed Income | Fidelity Freedom vs. Ms Global Fixed | Fidelity Freedom vs. Federated Ultrashort Bond |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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