Correlation Between Cref Inflation-linked and Fidelity Freedom
Can any of the company-specific risk be diversified away by investing in both Cref Inflation-linked 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 Cref Inflation-linked and Fidelity Freedom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cref Inflation Linked Bond and Fidelity Freedom Index, you can compare the effects of market volatilities on Cref Inflation-linked 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 Cref Inflation-linked with a short position of Fidelity Freedom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cref Inflation-linked and Fidelity Freedom.
Diversification Opportunities for Cref Inflation-linked and Fidelity Freedom
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cref and Fidelity is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Cref Inflation Linked Bond 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 Cref Inflation-linked 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 Cref Inflation Linked Bond 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 Cref Inflation-linked i.e., Cref Inflation-linked and Fidelity Freedom go up and down completely randomly.
Pair Corralation between Cref Inflation-linked and Fidelity Freedom
Assuming the 90 days trading horizon Cref Inflation-linked is expected to generate 2.21 times less return on investment than Fidelity Freedom. But when comparing it to its historical volatility, Cref Inflation Linked Bond is 3.94 times less risky than Fidelity Freedom. It trades about 0.2 of its potential returns per unit of risk. Fidelity Freedom Index is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 2,171 in Fidelity Freedom Index on October 25, 2024 and sell it today you would earn a total of 31.00 from holding Fidelity Freedom Index or generate 1.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cref Inflation Linked Bond vs. Fidelity Freedom Index
Performance |
| Timeline |
| Cref Inflation Linked |
| Fidelity Freedom Index |
Cref Inflation-linked and Fidelity Freedom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cref Inflation-linked and Fidelity Freedom
The main advantage of trading using opposite Cref Inflation-linked and Fidelity Freedom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cref Inflation-linked 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.| Cref Inflation-linked vs. Pace High Yield | Cref Inflation-linked vs. Buffalo High Yield | Cref Inflation-linked vs. Voya High Yield | Cref Inflation-linked vs. Prudential High Yield |
| Fidelity Freedom vs. Atac Inflation Rotation | Fidelity Freedom vs. Fidelity Sai Inflationfocused | Fidelity Freedom vs. Tiaa Cref Inflation Link | Fidelity Freedom vs. Cref Inflation Linked 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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