Correlation Between Fidelity Freedom and Frost Kempner

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

By analyzing existing cross correlation between Fidelity Freedom 2015 and Frost Kempner Treasury, you can compare the effects of market volatilities on Fidelity Freedom and Frost Kempner 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 Frost Kempner. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Freedom and Frost Kempner.

Diversification Opportunities for Fidelity Freedom and Frost Kempner

0.77

Correlation Coefficient

Fidelity Freedom  Frost Kempner

Poor diversification

The 3 months correlation between Fidelity and Frost is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Freedom 2015 and Frost Kempner Treasury in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Frost Kempner Treasury 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 2015 are associated (or correlated) with Frost Kempner. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Frost Kempner Treasury has no effect on the direction of Fidelity Freedom i.e., Fidelity Freedom and Frost Kempner go up and down completely randomly.

Pair Corralation between Fidelity Freedom and Frost Kempner

Assuming the 90 days horizon Fidelity Freedom 2015 is expected to under-perform the Frost Kempner. In addition to that, Fidelity Freedom is 2.98 times more volatile than Frost Kempner Treasury. It trades about -0.01 of its total potential returns per unit of risk. Frost Kempner Treasury is currently generating about 0.02 per unit of volatility. If you would invest  844.00  in Frost Kempner Treasury on September 17, 2024 and sell it today you would earn a total of  1.00  from holding Frost Kempner Treasury or generate 0.12% return on investment over 90 days.

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

Fidelity Freedom 2015  vs.  Frost Kempner Treasury

Fidelity Freedom 2015

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fidelity Freedom 2015 has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward-looking signals, Fidelity Freedom is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Frost Kempner Treasury

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Frost Kempner Treasury are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Frost Kempner 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 Frost Kempner

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

The idea behind Fidelity Freedom 2015 and Frost Kempner Treasury 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.