Correlation Between Fidelity Freedom and First Trust
Can any of the company-specific risk be diversified away by investing in both Fidelity Freedom and First Trust 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 First Trust 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 First Trust Short, you can compare the effects of market volatilities on Fidelity Freedom and First Trust 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 First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Freedom and First Trust.
Diversification Opportunities for Fidelity Freedom and First Trust
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Fidelity and First is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Freedom Index and First Trust Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Short 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 First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Short has no effect on the direction of Fidelity Freedom i.e., Fidelity Freedom and First Trust go up and down completely randomly.
Pair Corralation between Fidelity Freedom and First Trust
Assuming the 90 days horizon Fidelity Freedom Index is expected to generate 3.95 times more return on investment than First Trust. However, Fidelity Freedom is 3.95 times more volatile than First Trust Short. It trades about 0.39 of its potential returns per unit of risk. First Trust Short is currently generating about 0.42 per unit of risk. If you would invest 1,386 in Fidelity Freedom Index on April 19, 2025 and sell it today you would earn a total of 230.00 from holding Fidelity Freedom Index or generate 16.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Freedom Index vs. First Trust Short
Performance |
| Timeline |
| Fidelity Freedom Index |
| First Trust Short |
Fidelity Freedom and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Freedom and First Trust
The main advantage of trading using opposite Fidelity Freedom and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Freedom position performs unexpectedly, First Trust 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 First Trust will offset losses from the drop in First Trust's long position.| Fidelity Freedom vs. Barings High Yield | Fidelity Freedom vs. Pace Strategic Fixed | Fidelity Freedom vs. Morningstar Defensive Bond | Fidelity Freedom vs. Versatile Bond Portfolio |
| First Trust vs. T Rowe Price | First Trust vs. Deutsche Multi Asset Moderate | First Trust vs. Voya Target Retirement | First Trust vs. Jpmorgan Smartretirement 2035 |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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