Correlation Between Us Government and Fidelity Freedom
Can any of the company-specific risk be diversified away by investing in both Us Government 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 Us Government and Fidelity Freedom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Us Government Securities and Fidelity Freedom Index, you can compare the effects of market volatilities on Us Government 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 Us Government with a short position of Fidelity Freedom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Us Government and Fidelity Freedom.
Diversification Opportunities for Us Government and Fidelity Freedom
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between USGFX and Fidelity is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Us Government Securities 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 Us Government 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 Us Government Securities 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 Us Government i.e., Us Government and Fidelity Freedom go up and down completely randomly.
Pair Corralation between Us Government and Fidelity Freedom
Assuming the 90 days horizon Us Government is expected to generate 1.15 times less return on investment than Fidelity Freedom. But when comparing it to its historical volatility, Us Government Securities is 1.74 times less risky than Fidelity Freedom. It trades about 0.16 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 2,721 in Fidelity Freedom Index on September 12, 2024 and sell it today you would earn a total of 26.00 from holding Fidelity Freedom Index or generate 0.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Us Government Securities vs. Fidelity Freedom Index
Performance |
| Timeline |
| Us Government Securities |
| Fidelity Freedom Index |
Us Government and Fidelity Freedom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Us Government and Fidelity Freedom
The main advantage of trading using opposite Us Government and Fidelity Freedom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Us Government 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.| Us Government vs. Vanguard Gnma Fund | Us Government vs. Vanguard Intermediate Term Government | Us Government vs. Us Government Securities | Us Government vs. Us Government Securities |
| Fidelity Freedom vs. Vanguard Information Technology | Fidelity Freedom vs. Hennessy Technology Fund | Fidelity Freedom vs. Goldman Sachs Technology | Fidelity Freedom vs. Columbia Global Technology |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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