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 Index, 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
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Visa and Fidelity is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A 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 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 Index 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 1.93 times more return on investment than Fidelity Freedom. However, Visa is 1.93 times more volatile than Fidelity Freedom Index. It trades about 0.1 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 22,047 in Visa Class A on August 31, 2024 and sell it today you would earn a total of 9,461 from holding Visa Class A or generate 42.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. Fidelity Freedom Index
Performance |
| Timeline |
| Visa Class A |
| Fidelity Freedom Index |
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. 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
Other Complementary Tools
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance |