Correlation Between Fidelity Freedom and Brokerage

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

Diversification Opportunities for Fidelity Freedom and Brokerage

-0.06

Correlation Coefficient

Fidelity Freedom  Brokerage

Good diversification

The 3 months correlation between Fidelity and Brokerage is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Freedom 2015 and Brokerage And Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brokerage And Investment 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 Brokerage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brokerage And Investment has no effect on the direction of Fidelity Freedom i.e., Fidelity Freedom and Brokerage go up and down completely randomly.

Pair Corralation between Fidelity Freedom and Brokerage

Assuming the 90 days horizon Fidelity Freedom is expected to generate 18.17 times less return on investment than Brokerage. But when comparing it to its historical volatility, Fidelity Freedom 2015 is 3.48 times less risky than Brokerage. It trades about 0.05 of its potential returns per unit of risk. Brokerage And Investment is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  15,577  in Brokerage And Investment on September 12, 2024 and sell it today you would earn a total of  3,460  from holding Brokerage And Investment or generate 22.21% return on investment over 90 days.

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

Fidelity Freedom 2015  vs.  Brokerage And Investment

Fidelity Freedom 2015

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Freedom 2015 are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. 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.

Brokerage And Investment

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Brokerage And Investment are ranked lower than 22 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental drivers, Brokerage showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fidelity Freedom and Brokerage

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

The idea behind Fidelity Freedom 2015 and Brokerage And Investment 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.