Correlation Between Fidelity Sustainable and Fidelity Freedom

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Can any of the company-specific risk be diversified away by investing in both Fidelity Sustainable 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 Fidelity Sustainable and Fidelity Freedom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Sustainable Target and Fidelity Freedom Index, you can compare the effects of market volatilities on Fidelity Sustainable 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 Fidelity Sustainable with a short position of Fidelity Freedom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Sustainable and Fidelity Freedom.

Diversification Opportunities for Fidelity Sustainable and Fidelity Freedom

0.98
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Fidelity and Fidelity is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Sustainable Target and Fidelity Freedom Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Freedom Index and Fidelity Sustainable 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 Sustainable Target 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 Index has no effect on the direction of Fidelity Sustainable i.e., Fidelity Sustainable and Fidelity Freedom go up and down completely randomly.

Pair Corralation between Fidelity Sustainable and Fidelity Freedom

Assuming the 90 days horizon Fidelity Sustainable is expected to generate 1.17 times less return on investment than Fidelity Freedom. In addition to that, Fidelity Sustainable is 1.22 times more volatile than Fidelity Freedom Index. It trades about 0.05 of its total potential returns per unit of risk. Fidelity Freedom Index is currently generating about 0.08 per unit of volatility. If you would invest  2,135  in Fidelity Freedom Index on May 2, 2025 and sell it today you would earn a total of  759.00  from holding Fidelity Freedom Index or generate 35.55% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy54.56%
ValuesDaily Returns

Fidelity Sustainable Target  vs.  Fidelity Freedom Index

 Performance 
       Timeline  
Fidelity Sustainable 

Risk-Adjusted Performance

Solid

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Sustainable Target are ranked lower than 21 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Fidelity Sustainable may actually be approaching a critical reversion point that can send shares even higher in August 2025.
Fidelity Freedom Index 

Risk-Adjusted Performance

Solid

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Freedom Index are ranked lower than 19 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Fidelity Freedom may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Fidelity Sustainable and Fidelity Freedom Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Fidelity Sustainable and Fidelity Freedom

The main advantage of trading using opposite Fidelity Sustainable and Fidelity Freedom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Sustainable 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 Fidelity Sustainable Target and Fidelity Freedom Index 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.

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