Correlation Between Growth Fund and Fidelity Freedom

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

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

Diversification Opportunities for Growth Fund and Fidelity Freedom

0.06

Correlation Coefficient

Growth Fund  Fidelity Freedom

Significant diversification

The 3 months correlation between Growth and Fidelity is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Growth Fund Of and Fidelity Freedom Blend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Freedom Blend and Growth Fund 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 Growth Fund Of 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 Blend has no effect on the direction of Growth Fund i.e., Growth Fund and Fidelity Freedom go up and down completely randomly.

Pair Corralation between Growth Fund and Fidelity Freedom

Assuming the 90 days horizon Growth Fund Of is expected to under-perform the Fidelity Freedom. In addition to that, Growth Fund is 4.12 times more volatile than Fidelity Freedom Blend. It trades about -0.07 of its total potential returns per unit of risk. Fidelity Freedom Blend is currently generating about 0.13 per unit of volatility. If you would invest  994.00  in Fidelity Freedom Blend on December 22, 2024 and sell it today you would earn a total of  23.00  from holding Fidelity Freedom Blend or generate 2.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Growth Fund Of  vs.  Fidelity Freedom Blend

Growth Fund

Risk-Adjusted Performance

Very Weak

Over the last 90 days Growth Fund Of has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Growth Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Fidelity Freedom Blend

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Freedom Blend are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental drivers, 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 Growth Fund and Fidelity Freedom

The main advantage of trading using opposite Growth Fund and Fidelity Freedom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Growth Fund 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 Growth Fund Of and Fidelity Freedom Blend 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.