Correlation Between Blackrock Lifepath and Fidelity Freedom

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

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

Diversification Opportunities for Blackrock Lifepath and Fidelity Freedom

0.88

Correlation Coefficient

Blackrock Lifepath  Fidelity Freedom

Very poor diversification

The 3 months correlation between Blackrock and Fidelity is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Lifepath Idx and Fidelity Freedom Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Freedom Income and Blackrock Lifepath 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 Blackrock Lifepath Idx 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 Income has no effect on the direction of Blackrock Lifepath i.e., Blackrock Lifepath and Fidelity Freedom go up and down completely randomly.

Pair Corralation between Blackrock Lifepath and Fidelity Freedom

Assuming the 90 days horizon Blackrock Lifepath is expected to generate 1.82 times less return on investment than Fidelity Freedom. In addition to that, Blackrock Lifepath is 1.45 times more volatile than Fidelity Freedom Income. It trades about 0.05 of its total potential returns per unit of risk. Fidelity Freedom Income is currently generating about 0.14 per unit of volatility. If you would invest  1,052  in Fidelity Freedom Income on December 30, 2024 and sell it today you would earn a total of  23.00  from holding Fidelity Freedom Income or generate 2.19% return on investment over 90 days.

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

Blackrock Lifepath Idx  vs.  Fidelity Freedom Income

Blackrock Lifepath Idx

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Lifepath Idx are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Blackrock Lifepath is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Fidelity Freedom Income

Risk-Adjusted Performance

OK

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.

Pair Trading with Blackrock Lifepath and Fidelity Freedom

The main advantage of trading using opposite Blackrock Lifepath and Fidelity Freedom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blackrock Lifepath 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 Blackrock Lifepath Idx and Fidelity Freedom Income 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.