Correlation Between Nasdaq 100 and Fidelity Freedom
Can any of the company-specific risk be diversified away by investing in both Nasdaq 100 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 Nasdaq 100 and Fidelity Freedom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nasdaq 100 Index Fund and Fidelity Freedom Blend, you can compare the effects of market volatilities on Nasdaq 100 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 Nasdaq 100 with a short position of Fidelity Freedom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq 100 and Fidelity Freedom.
Diversification Opportunities for Nasdaq 100 and Fidelity Freedom
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Nasdaq and Fidelity is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq 100 Index Fund 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 Nasdaq 100 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 Nasdaq 100 Index 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 Blend has no effect on the direction of Nasdaq 100 i.e., Nasdaq 100 and Fidelity Freedom go up and down completely randomly.
Pair Corralation between Nasdaq 100 and Fidelity Freedom
Assuming the 90 days horizon Nasdaq 100 is expected to generate 2.67 times less return on investment than Fidelity Freedom. In addition to that, Nasdaq 100 is 1.56 times more volatile than Fidelity Freedom Blend. It trades about 0.02 of its total potential returns per unit of risk. Fidelity Freedom Blend is currently generating about 0.1 per unit of volatility. If you would invest 1,274 in Fidelity Freedom Blend on October 26, 2024 and sell it today you would earn a total of 17.00 from holding Fidelity Freedom Blend or generate 1.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nasdaq 100 Index Fund vs. Fidelity Freedom Blend
Performance |
| Timeline |
| Nasdaq 100 Index |
| Fidelity Freedom Blend |
Nasdaq 100 and Fidelity Freedom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nasdaq 100 and Fidelity Freedom
The main advantage of trading using opposite Nasdaq 100 and Fidelity Freedom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq 100 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.| Nasdaq 100 vs. Capital Growth Fund | Nasdaq 100 vs. Emerging Markets Fund | Nasdaq 100 vs. High Income Fund | Nasdaq 100 vs. International Fund International |
| Fidelity Freedom vs. Issachar Fund Class | Fidelity Freedom vs. Nasdaq 100 Index Fund | Fidelity Freedom vs. Boyd Watterson Limited | Fidelity Freedom vs. T Rowe Price |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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