Correlation Between Fidelity Freedom and Fidelity Blue

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

By analyzing existing cross correlation between Fidelity Freedom 2015 and Fidelity Blue Chip, you can compare the effects of market volatilities on Fidelity Freedom and Fidelity Blue 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 Fidelity Blue. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Freedom and Fidelity Blue.

Diversification Opportunities for Fidelity Freedom and Fidelity Blue

-0.13

Correlation Coefficient

Fidelity Freedom  Fidelity Blue

Good diversification

The 3 months correlation between Fidelity and Fidelity is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Freedom 2015 and Fidelity Blue Chip in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Blue Chip 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 2015 are associated (or correlated) with Fidelity Blue. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Blue Chip has no effect on the direction of Fidelity Freedom i.e., Fidelity Freedom and Fidelity Blue go up and down completely randomly.

Pair Corralation between Fidelity Freedom and Fidelity Blue

Assuming the 90 days horizon Fidelity Freedom 2015 is expected to under-perform the Fidelity Blue. But the mutual fund apears to be less risky and, when comparing its historical volatility, Fidelity Freedom 2015 is 3.1 times less risky than Fidelity Blue. The mutual fund trades about -0.1 of its potential returns per unit of risk. The Fidelity Blue Chip is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  20,740  in Fidelity Blue Chip on September 27, 2024 and sell it today you would earn a total of  2,575  from holding Fidelity Blue Chip or generate 12.42% return on investment over 90 days.

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

Fidelity Freedom 2015  vs.  Fidelity Blue Chip

Fidelity Freedom 2015

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fidelity Freedom 2015 has generated negative risk-adjusted returns adding no value to fund investors. 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.

Fidelity Blue Chip

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Blue Chip are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Fidelity Blue may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Fidelity Freedom and Fidelity Blue

The main advantage of trading using opposite Fidelity Freedom and Fidelity Blue positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Freedom position performs unexpectedly, Fidelity Blue 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 Blue will offset losses from the drop in Fidelity Blue's long position.

The idea behind Fidelity Freedom 2015 and Fidelity Blue Chip 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..