Correlation Between Fidelity Sustainable and Fidelity Freedom
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
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Fidelity and Fidelity is 0.88. 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 1.08 times less return on investment than Fidelity Freedom. In addition to that, Fidelity Sustainable is 1.05 times more volatile than Fidelity Freedom Index. It trades about 0.21 of its total potential returns per unit of risk. Fidelity Freedom Index is currently generating about 0.24 per unit of volatility. If you would invest 2,730 in Fidelity Freedom Index on May 28, 2025 and sell it today you would earn a total of 226.00 from holding Fidelity Freedom Index or generate 8.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 98.41% |
| Values | Daily Returns |
Fidelity Sustainable Target vs. Fidelity Freedom Index
Performance |
| Timeline |
| Fidelity Sustainable |
| Fidelity Freedom Index |
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.
| Fidelity Freedom vs. Fidelity Freedom Index | Fidelity Freedom vs. Fidelity Freedom Index | Fidelity Freedom vs. Fidelity Freedom Index | Fidelity Freedom vs. Fidelity Freedom Index |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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