Correlation Between L Abbett and Fidelity Freedom

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

By analyzing existing cross correlation between L Abbett Fundamental and Fidelity Freedom 2040, you can compare the effects of market volatilities on L Abbett and Fidelity Freedom 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 L Abbett with a short position of Fidelity Freedom. Check out your portfolio center. Please also check ongoing floating volatility patterns of L Abbett and Fidelity Freedom.

Diversification Opportunities for L Abbett and Fidelity Freedom

0.51

Correlation Coefficient

L Abbett  Fidelity Freedom

Very weak diversification

The 3 months correlation between LAVVX and Fidelity is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding L Abbett Fundamental and Fidelity Freedom 2040 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Freedom 2040 and L Abbett 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 L Abbett Fundamental are associated (or correlated) with Fidelity Freedom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Freedom 2040 has no effect on the direction of L Abbett i.e., L Abbett and Fidelity Freedom go up and down completely randomly.

Pair Corralation between L Abbett and Fidelity Freedom

Assuming the 90 days horizon L Abbett Fundamental is expected to generate 0.84 times more return on investment than Fidelity Freedom. However, L Abbett Fundamental is 1.19 times less risky than Fidelity Freedom. It trades about 0.37 of its potential returns per unit of risk. Fidelity Freedom 2040 is currently generating about 0.08 per unit of risk. If you would invest  1,556  in L Abbett Fundamental on October 25, 2024 and sell it today you would earn a total of  75.00  from holding L Abbett Fundamental or generate 4.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	94.74%
Values	Daily Returns

L Abbett Fundamental  vs.  Fidelity Freedom 2040

L Abbett Fundamental

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in L Abbett Fundamental are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, L Abbett may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Fidelity Freedom 2040

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Freedom 2040 are ranked lower than 2 (%) 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.

Pair Trading with L Abbett and Fidelity Freedom

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

The idea behind L Abbett Fundamental and Fidelity Freedom 2040 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.