Correlation Between Ab Discovery and Fidelity Freedom

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

By analyzing existing cross correlation between Ab Discovery Value and Fidelity Freedom 2060, you can compare the effects of market volatilities on Ab Discovery 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 Ab Discovery with a short position of Fidelity Freedom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Discovery and Fidelity Freedom.

Diversification Opportunities for Ab Discovery and Fidelity Freedom

0.78

Correlation Coefficient

Ab Discovery  Fidelity Freedom

Poor diversification

The 3 months correlation between ABYSX and Fidelity is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Ab Discovery Value and Fidelity Freedom 2060 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Freedom 2060 and Ab Discovery 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 Ab Discovery Value 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 2060 has no effect on the direction of Ab Discovery i.e., Ab Discovery and Fidelity Freedom go up and down completely randomly.

Pair Corralation between Ab Discovery and Fidelity Freedom

Assuming the 90 days horizon Ab Discovery Value is expected to generate 1.75 times more return on investment than Fidelity Freedom. However, Ab Discovery is 1.75 times more volatile than Fidelity Freedom 2060. It trades about 0.15 of its potential returns per unit of risk. Fidelity Freedom 2060 is currently generating about 0.12 per unit of risk. If you would invest  2,359  in Ab Discovery Value on September 13, 2024 and sell it today you would earn a total of  237.00  from holding Ab Discovery Value or generate 10.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Ab Discovery Value  vs.  Fidelity Freedom 2060

Ab Discovery Value

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ab Discovery Value are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Ab Discovery may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Fidelity Freedom 2060

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Freedom 2060 are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward-looking signals, 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 Ab Discovery and Fidelity Freedom

The main advantage of trading using opposite Ab Discovery and Fidelity Freedom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Discovery 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 Ab Discovery Value and Fidelity Freedom 2060 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.