Correlation Between TRON and Fidelity Freedom

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

By analyzing existing cross correlation between TRON and Fidelity Freedom 2020, you can compare the effects of market volatilities on TRON 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 TRON with a short position of Fidelity Freedom. Check out your portfolio center. Please also check ongoing floating volatility patterns of TRON and Fidelity Freedom.

Diversification Opportunities for TRON and Fidelity Freedom

-0.07

Correlation Coefficient

TRON  Fidelity Freedom

Good diversification

The 3 months correlation between TRON and Fidelity is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding TRON and Fidelity Freedom 2020 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Freedom 2020 and TRON 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 TRON 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 2020 has no effect on the direction of TRON i.e., TRON and Fidelity Freedom go up and down completely randomly.

Pair Corralation between TRON and Fidelity Freedom

Assuming the 90 days trading horizon TRON is expected to generate 15.55 times more return on investment than Fidelity Freedom. However, TRON is 15.55 times more volatile than Fidelity Freedom 2020. It trades about 0.09 of its potential returns per unit of risk. Fidelity Freedom 2020 is currently generating about 0.07 per unit of risk. If you would invest  5.48  in TRON on October 9, 2024 and sell it today you would earn a total of  21.52  from holding TRON or generate 392.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	61.76%
Values	Daily Returns

TRON  vs.  Fidelity Freedom 2020

TRON

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TRON are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, TRON exhibited solid returns over the last few months and may actually be approaching a breakup point.

Fidelity Freedom 2020

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fidelity Freedom 2020 has generated negative risk-adjusted returns adding no value to fund investors. 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 TRON and Fidelity Freedom

The main advantage of trading using opposite TRON and Fidelity Freedom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TRON 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 TRON and Fidelity Freedom 2020 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.