Correlation Between Fidelity Freedom and Artisan Small

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

By analyzing existing cross correlation between Fidelity Freedom 2035 and Artisan Small Cap, you can compare the effects of market volatilities on Fidelity Freedom and Artisan Small 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 Artisan Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Freedom and Artisan Small.

Diversification Opportunities for Fidelity Freedom and Artisan Small

0.34

Correlation Coefficient

Fidelity Freedom  Artisan Small

Weak diversification

The 3 months correlation between Fidelity and Artisan is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Freedom 2035 and Artisan Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Artisan Small Cap 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 2035 are associated (or correlated) with Artisan Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Artisan Small Cap has no effect on the direction of Fidelity Freedom i.e., Fidelity Freedom and Artisan Small go up and down completely randomly.

Pair Corralation between Fidelity Freedom and Artisan Small

Assuming the 90 days horizon Fidelity Freedom 2035 is expected to generate 0.44 times more return on investment than Artisan Small. However, Fidelity Freedom 2035 is 2.26 times less risky than Artisan Small. It trades about 0.02 of its potential returns per unit of risk. Artisan Small Cap is currently generating about -0.1 per unit of risk. If you would invest  1,568  in Fidelity Freedom 2035 on December 30, 2024 and sell it today you would earn a total of  11.00  from holding Fidelity Freedom 2035 or generate 0.7% 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 2035  vs.  Artisan Small Cap

Fidelity Freedom 2035

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Freedom 2035 are ranked lower than 1 (%) 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.

Artisan Small Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Artisan Small Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Fidelity Freedom and Artisan Small

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

The idea behind Fidelity Freedom 2035 and Artisan Small Cap 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.