Correlation Between Snap and Fidelity Freedom
Can any of the company-specific risk be diversified away by investing in both Snap 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 Snap and Fidelity Freedom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and Fidelity Freedom Index, you can compare the effects of market volatilities on Snap 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 Snap with a short position of Fidelity Freedom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and Fidelity Freedom.
Diversification Opportunities for Snap and Fidelity Freedom
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Snap and Fidelity is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc 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 Snap 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 Snap Inc 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 Snap i.e., Snap and Fidelity Freedom go up and down completely randomly.
Pair Corralation between Snap and Fidelity Freedom
Given the investment horizon of 90 days Snap Inc is expected to generate 7.69 times more return on investment than Fidelity Freedom. However, Snap is 7.69 times more volatile than Fidelity Freedom Index. It trades about 0.03 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 1,004 in Snap Inc on August 31, 2024 and sell it today you would earn a total of 177.00 from holding Snap Inc or generate 17.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Snap Inc vs. Fidelity Freedom Index
Performance |
| Timeline |
| Snap Inc |
| Fidelity Freedom Index |
Snap and Fidelity Freedom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and Fidelity Freedom
The main advantage of trading using opposite Snap and Fidelity Freedom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap 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.The idea behind Snap Inc and Fidelity Freedom Index pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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