Correlation Between Allianzgi Technology and Fidelity Freedom

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

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

Diversification Opportunities for Allianzgi Technology and Fidelity Freedom

0.86

Correlation Coefficient

Allianzgi Technology  Fidelity Freedom

Very poor diversification

The 3 months correlation between Allianzgi and Fidelity is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Allianzgi Technology Fund 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 Allianzgi Technology 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 Allianzgi Technology Fund 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 Allianzgi Technology i.e., Allianzgi Technology and Fidelity Freedom go up and down completely randomly.

Pair Corralation between Allianzgi Technology and Fidelity Freedom

Assuming the 90 days horizon Allianzgi Technology Fund is expected to generate 2.2 times more return on investment than Fidelity Freedom. However, Allianzgi Technology is 2.2 times more volatile than Fidelity Freedom Index. It trades about 0.21 of its potential returns per unit of risk. Fidelity Freedom Index is currently generating about 0.12 per unit of risk. If you would invest  8,094  in Allianzgi Technology Fund on September 14, 2024 and sell it today you would earn a total of  1,364  from holding Allianzgi Technology Fund or generate 16.85% return on investment over 90 days.

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

Allianzgi Technology Fund  vs.  Fidelity Freedom Index

Allianzgi Technology

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Allianzgi Technology Fund are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Allianzgi Technology showed solid returns over the last few months and may actually be approaching a breakup point.

Fidelity Freedom Index

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Freedom Index are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, 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 Allianzgi Technology and Fidelity Freedom

The main advantage of trading using opposite Allianzgi Technology and Fidelity Freedom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allianzgi Technology 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 Allianzgi Technology Fund 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.