Correlation Between Fidelity Freedom and Wilmington Trust

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

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

Diversification Opportunities for Fidelity Freedom and Wilmington Trust

0.31

Correlation Coefficient

Fidelity Freedom  Wilmington Trust

Weak diversification

The 3 months correlation between Fidelity and Wilmington is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Freedom Income and Wilmington Trust Retirement in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wilmington Trust Ret 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 Income are associated (or correlated) with Wilmington Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wilmington Trust Ret has no effect on the direction of Fidelity Freedom i.e., Fidelity Freedom and Wilmington Trust go up and down completely randomly.

Pair Corralation between Fidelity Freedom and Wilmington Trust

Assuming the 90 days horizon Fidelity Freedom is expected to generate 3.5 times less return on investment than Wilmington Trust. But when comparing it to its historical volatility, Fidelity Freedom Income is 3.26 times less risky than Wilmington Trust. It trades about 0.05 of its potential returns per unit of risk. Wilmington Trust Retirement is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  25,334  in Wilmington Trust Retirement on October 10, 2024 and sell it today you would earn a total of  7,241  from holding Wilmington Trust Retirement or generate 28.58% return on investment over 90 days.

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

Fidelity Freedom Income  vs.  Wilmington Trust Retirement

Fidelity Freedom Income

Risk-Adjusted Performance

0 of 100

Very Weak

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

Wilmington Trust Ret

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Wilmington Trust Retirement are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Wilmington Trust 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 Wilmington Trust

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

The idea behind Fidelity Freedom Income and Wilmington Trust Retirement 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 CEOs Directory module to screen CEOs from public companies around the world.