Correlation Between Fidelity Freedom and Jhancock Diversified

Can any of the company-specific risk be diversified away by investing in both Fidelity Freedom and Jhancock Diversified 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 Jhancock Diversified 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 Jhancock Diversified Macro, you can compare the effects of market volatilities on Fidelity Freedom and Jhancock Diversified 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 Jhancock Diversified. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Freedom and Jhancock Diversified.

Diversification Opportunities for Fidelity Freedom and Jhancock Diversified

0.71

Correlation Coefficient

Fidelity Freedom  Jhancock Diversified

Poor diversification

The 3 months correlation between Fidelity and Jhancock is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Freedom Blend and Jhancock Diversified Macro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jhancock Diversified 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 Jhancock Diversified. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jhancock Diversified has no effect on the direction of Fidelity Freedom i.e., Fidelity Freedom and Jhancock Diversified go up and down completely randomly.

Pair Corralation between Fidelity Freedom and Jhancock Diversified

Assuming the 90 days horizon Fidelity Freedom Blend is expected to generate 0.64 times more return on investment than Jhancock Diversified. However, Fidelity Freedom Blend is 1.57 times less risky than Jhancock Diversified. It trades about 0.08 of its potential returns per unit of risk. Jhancock Diversified Macro is currently generating about 0.01 per unit of risk. If you would invest  893.00  in Fidelity Freedom Blend on September 21, 2024 and sell it today you would earn a total of  135.00  from holding Fidelity Freedom Blend or generate 15.12% return on investment over 90 days.

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

Fidelity Freedom Blend  vs.  Jhancock Diversified Macro

Fidelity Freedom Blend

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fidelity Freedom Blend 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.

Jhancock Diversified

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jhancock Diversified Macro has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Jhancock Diversified 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 Jhancock Diversified

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

The idea behind Fidelity Freedom Blend and Jhancock Diversified Macro 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.