Correlation Between Fabxx and Fidelity Freedom

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

By analyzing existing cross correlation between Fabxx and Fidelity Freedom 2005, you can compare the effects of market volatilities on Fabxx 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 Fabxx with a short position of Fidelity Freedom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fabxx and Fidelity Freedom.

Diversification Opportunities for Fabxx and Fidelity Freedom

0.0

Correlation Coefficient

Fabxx  Fidelity Freedom

Pay attention - limited upside

The 3 months correlation between Fabxx and Fidelity is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Fabxx and Fidelity Freedom 2005 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Freedom 2005 and Fabxx 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 Fabxx 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 2005 has no effect on the direction of Fabxx i.e., Fabxx and Fidelity Freedom go up and down completely randomly.

Pair Corralation between Fabxx and Fidelity Freedom

If you would invest (100.00) in Fidelity Freedom 2005 on December 29, 2024 and sell it today you would earn a total of  100.00  from holding Fidelity Freedom 2005 or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Fabxx  vs.  Fidelity Freedom 2005

Fabxx

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fabxx has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Fidelity Freedom 2005

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fidelity Freedom 2005 has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, 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 Fabxx and Fidelity Freedom

The main advantage of trading using opposite Fabxx and Fidelity Freedom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fabxx 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 Fabxx and Fidelity Freedom 2005 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.

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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.