Correlation Between Touchstone Large and Fidelity Freedom
Can any of the company-specific risk be diversified away by investing in both Touchstone Large 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 Touchstone Large and Fidelity Freedom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Touchstone Large Cap and Fidelity Freedom Blend, you can compare the effects of market volatilities on Touchstone Large 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 Touchstone Large with a short position of Fidelity Freedom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Touchstone Large and Fidelity Freedom.
Diversification Opportunities for Touchstone Large and Fidelity Freedom
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Touchstone and Fidelity is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Touchstone Large Cap and Fidelity Freedom Blend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Freedom Blend and Touchstone Large 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 Touchstone Large Cap 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 Blend has no effect on the direction of Touchstone Large i.e., Touchstone Large and Fidelity Freedom go up and down completely randomly.
Pair Corralation between Touchstone Large and Fidelity Freedom
Assuming the 90 days horizon Touchstone Large is expected to generate 1.13 times less return on investment than Fidelity Freedom. But when comparing it to its historical volatility, Touchstone Large Cap is 1.02 times less risky than Fidelity Freedom. It trades about 0.09 of its potential returns per unit of risk. Fidelity Freedom Blend is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 950.00 in Fidelity Freedom Blend on August 26, 2024 and sell it today you would earn a total of 360.00 from holding Fidelity Freedom Blend or generate 37.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Touchstone Large Cap vs. Fidelity Freedom Blend
Performance |
| Timeline |
| Touchstone Large Cap |
| Fidelity Freedom Blend |
Touchstone Large and Fidelity Freedom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Touchstone Large and Fidelity Freedom
The main advantage of trading using opposite Touchstone Large and Fidelity Freedom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Touchstone Large 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.| Touchstone Large vs. Aqr Large Cap | Touchstone Large vs. Fisher Large Cap | Touchstone Large vs. Wasatch Large Cap | Touchstone Large vs. Knights Of Umbus |
| Fidelity Freedom vs. Morningstar Unconstrained Allocation | Fidelity Freedom vs. T Rowe Price | Fidelity Freedom vs. Touchstone Large Cap | Fidelity Freedom vs. Goldman Sachs Large |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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