Correlation Between Calvert Global and Fidelity Freedom

Can any of the company-specific risk be diversified away by investing in both Calvert Global 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 Calvert Global and Fidelity Freedom into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Calvert Global Energy and Fidelity Freedom 2015, you can compare the effects of market volatilities on Calvert Global 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 Calvert Global with a short position of Fidelity Freedom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Calvert Global and Fidelity Freedom.

Diversification Opportunities for Calvert Global and Fidelity Freedom

0.63

Correlation Coefficient

Calvert Global  Fidelity Freedom

Poor diversification

The 3 months correlation between Calvert and Fidelity is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Calvert Global Energy and Fidelity Freedom 2015 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Freedom 2015 and Calvert Global 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 Calvert Global Energy 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 2015 has no effect on the direction of Calvert Global i.e., Calvert Global and Fidelity Freedom go up and down completely randomly.

Pair Corralation between Calvert Global and Fidelity Freedom

Assuming the 90 days horizon Calvert Global Energy is expected to under-perform the Fidelity Freedom. In addition to that, Calvert Global is 2.59 times more volatile than Fidelity Freedom 2015. It trades about -0.03 of its total potential returns per unit of risk. Fidelity Freedom 2015 is currently generating about 0.05 per unit of volatility. If you would invest  1,148  in Fidelity Freedom 2015 on September 23, 2024 and sell it today you would earn a total of  25.00  from holding Fidelity Freedom 2015 or generate 2.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Calvert Global Energy  vs.  Fidelity Freedom 2015

Calvert Global Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Calvert Global Energy has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Fidelity Freedom 2015

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fidelity Freedom 2015 has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward-looking signals, Fidelity Freedom is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Calvert Global and Fidelity Freedom

The main advantage of trading using opposite Calvert Global and Fidelity Freedom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Calvert Global 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.

The idea behind Calvert Global Energy and Fidelity Freedom 2015 pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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.