Correlation Between Fidelity Freedom and Balanced Fund
Can any of the company-specific risk be diversified away by investing in both Fidelity Freedom and Balanced Fund 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 Freedom and Balanced Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Freedom Index and Balanced Fund Retail, you can compare the effects of market volatilities on Fidelity Freedom and Balanced Fund 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 Freedom with a short position of Balanced Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Freedom and Balanced Fund.
Diversification Opportunities for Fidelity Freedom and Balanced Fund
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fidelity and Balanced is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Freedom Index and Balanced Fund Retail in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Balanced Fund Retail and Fidelity Freedom 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 Freedom Index are associated (or correlated) with Balanced Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Balanced Fund Retail has no effect on the direction of Fidelity Freedom i.e., Fidelity Freedom and Balanced Fund go up and down completely randomly.
Pair Corralation between Fidelity Freedom and Balanced Fund
Assuming the 90 days horizon Fidelity Freedom Index is expected to generate 1.34 times more return on investment than Balanced Fund. However, Fidelity Freedom is 1.34 times more volatile than Balanced Fund Retail. It trades about 0.21 of its potential returns per unit of risk. Balanced Fund Retail is currently generating about 0.26 per unit of risk. If you would invest 2,751 in Fidelity Freedom Index on June 1, 2025 and sell it today you would earn a total of 204.00 from holding Fidelity Freedom Index or generate 7.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Freedom Index vs. Balanced Fund Retail
Performance |
| Timeline |
| Fidelity Freedom Index |
| Balanced Fund Retail |
Fidelity Freedom and Balanced Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Freedom and Balanced Fund
The main advantage of trading using opposite Fidelity Freedom and Balanced Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Freedom position performs unexpectedly, Balanced Fund 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 Balanced Fund will offset losses from the drop in Balanced Fund's long position.| Fidelity Freedom vs. Harding Loevner Emerging | Fidelity Freedom vs. Angel Oak Multi Strategy | Fidelity Freedom vs. Dodge Cox Emerging | Fidelity Freedom vs. Balanced Strategy Fund |
| Balanced Fund vs. Muirfield Fund Retail | Balanced Fund vs. Dynamic Growth Fund | Balanced Fund vs. Infrastructure Fund Retail | Balanced Fund vs. Quantex Fund Retail |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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