Correlation Between Visa and Fidelity Freedom
Can any of the company-specific risk be diversified away by investing in both Visa 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 Visa and Fidelity Freedom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Visa Class A and Fidelity Freedom 2020, you can compare the effects of market volatilities on Visa 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 Visa with a short position of Fidelity Freedom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Fidelity Freedom.
Diversification Opportunities for Visa and Fidelity Freedom
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Visa and Fidelity is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Fidelity Freedom 2020 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Freedom 2020 and Visa 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 Visa Class A 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 2020 has no effect on the direction of Visa i.e., Visa and Fidelity Freedom go up and down completely randomly.
Pair Corralation between Visa and Fidelity Freedom
Taking into account the 90-day investment horizon Visa Class A is expected to generate 2.9 times more return on investment than Fidelity Freedom. However, Visa is 2.9 times more volatile than Fidelity Freedom 2020. It trades about 0.35 of its potential returns per unit of risk. Fidelity Freedom 2020 is currently generating about 0.18 per unit of risk. If you would invest 28,929 in Visa Class A on September 1, 2024 and sell it today you would earn a total of 2,579 from holding Visa Class A or generate 8.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. Fidelity Freedom 2020
Performance |
| Timeline |
| Visa Class A |
| Fidelity Freedom 2020 |
Visa and Fidelity Freedom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Fidelity Freedom
The main advantage of trading using opposite Visa and Fidelity Freedom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa 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.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Fidelity Freedom vs. Fidelity Freedom 2010 | Fidelity Freedom vs. Fidelity Freedom 2030 | Fidelity Freedom vs. Fidelity Freedom Income | Fidelity Freedom vs. Fidelity Freedom 2040 |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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