Correlation Between Fidelity Freedom and Aqr Managed

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

By analyzing existing cross correlation between Fidelity Freedom Index and Aqr Managed Futures, you can compare the effects of market volatilities on Fidelity Freedom and Aqr Managed 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 Aqr Managed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Freedom and Aqr Managed.

Diversification Opportunities for Fidelity Freedom and Aqr Managed

0.63

Correlation Coefficient

Fidelity Freedom  Aqr Managed

Poor diversification

The 3 months correlation between Fidelity and Aqr is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Freedom Index and Aqr Managed Futures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqr Managed Futures 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 Index are associated (or correlated) with Aqr Managed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aqr Managed Futures has no effect on the direction of Fidelity Freedom i.e., Fidelity Freedom and Aqr Managed go up and down completely randomly.

Pair Corralation between Fidelity Freedom and Aqr Managed

Assuming the 90 days horizon Fidelity Freedom is expected to generate 4.3 times less return on investment than Aqr Managed. But when comparing it to its historical volatility, Fidelity Freedom Index is 3.93 times less risky than Aqr Managed. It trades about 0.14 of its potential returns per unit of risk. Aqr Managed Futures is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  829.00  in Aqr Managed Futures on December 20, 2024 and sell it today you would earn a total of  71.00  from holding Aqr Managed Futures or generate 8.56% return on investment over 90 days.

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

Fidelity Freedom Index  vs.  Aqr Managed Futures

Fidelity Freedom Index

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Freedom Index are ranked lower than 11 (%) 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.

Aqr Managed Futures

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aqr Managed Futures are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Aqr Managed may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Fidelity Freedom and Aqr Managed

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

The idea behind Fidelity Freedom Index and Aqr Managed Futures 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 Commodity Directory module to find actively traded commodities issued by global exchanges.