Correlation Between Fidelity Freedom and Fa529 Tl

Can any of the company-specific risk be diversified away by investing in both Fidelity Freedom and Fa529 Tl 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 Fidelity Freedom and Fa529 Tl into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Fidelity Freedom Blend and Fa529 Tl Pt, you can compare the effects of market volatilities on Fidelity Freedom and Fa529 Tl 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 Fidelity Freedom with a short position of Fa529 Tl. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Freedom and Fa529 Tl.

Diversification Opportunities for Fidelity Freedom and Fa529 Tl

0.81

Correlation Coefficient

Fidelity Freedom  Fa529 Tl

Very poor diversification

The 3 months correlation between Fidelity and Fa529 is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Freedom Blend and Fa529 Tl Pt in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fa529 Tl Pt and Fidelity Freedom 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 Fidelity Freedom Blend are associated (or correlated) with Fa529 Tl. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fa529 Tl Pt has no effect on the direction of Fidelity Freedom i.e., Fidelity Freedom and Fa529 Tl go up and down completely randomly.

Pair Corralation between Fidelity Freedom and Fa529 Tl

Assuming the 90 days horizon Fidelity Freedom Blend is expected to generate 2.15 times more return on investment than Fa529 Tl. However, Fidelity Freedom is 2.15 times more volatile than Fa529 Tl Pt. It trades about 0.01 of its potential returns per unit of risk. Fa529 Tl Pt is currently generating about -0.11 per unit of risk. If you would invest  1,280  in Fidelity Freedom Blend on October 24, 2024 and sell it today you would earn a total of  3.00  from holding Fidelity Freedom Blend or generate 0.23% return on investment over 90 days.

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

Fidelity Freedom Blend  vs.  Fa529 Tl Pt

Fidelity Freedom Blend

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Freedom Blend are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. 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.

Fa529 Tl Pt

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fa529 Tl Pt has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Fa529 Tl is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Fidelity Freedom and Fa529 Tl

The main advantage of trading using opposite Fidelity Freedom and Fa529 Tl positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Freedom position performs unexpectedly, Fa529 Tl 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 Fa529 Tl will offset losses from the drop in Fa529 Tl's long position.

The idea behind Fidelity Freedom Blend and Fa529 Tl Pt 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.