# Correlation Between American Funds and Fidelity Freedom

##### Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both American Funds 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 American Funds and Fidelity Freedom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds 2010 and Fidelity Freedom 2010, you can compare the effects of market volatilities on American Funds 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 American Funds with a short position of Fidelity Freedom. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Fidelity Freedom.

## Diversification Opportunities for American Funds and Fidelity Freedom

 0.74 Correlation Coefficient

### Poor diversification

The 3 months correlation between American and Fidelity is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding AMERICAN FUNDS 2010 and FIDELITY FREEDOM 2010 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Freedom 2010 and American Funds 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 American Funds 2010 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 2010 has no effect on the direction of American Funds i.e., American Funds and Fidelity Freedom go up and down completely randomly.

## Pair Corralation between American Funds and Fidelity Freedom

Assuming the 90 days horizon American Funds is expected to generate 1.01 times less return on investment than Fidelity Freedom. In addition to that, American Funds is 1.02 times more volatile than Fidelity Freedom 2010. It trades about 0.22 of its total potential returns per unit of risk. Fidelity Freedom 2010 is currently generating about 0.23 per unit of volatility. If you would invest  1,354  in Fidelity Freedom 2010 on December 5, 2023 and sell it today you would earn a total of  22.00  from holding Fidelity Freedom 2010 or generate 1.62% return on investment over 90 days.
 Time Period 3 Months [change] Direction Moves Together Strength Significant Accuracy 100.0% Values Daily Returns

## AMERICAN FUNDS 2010  vs.  FIDELITY FREEDOM 2010

 Performance
 Timeline
 American Funds 2010 Correlation Profile

### 2 of 100

 Low High
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in American Funds 2010 are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, American Funds is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
 Performance Backtest Predict
 Fidelity Freedom 2010 Correlation Profile

### 4 of 100

 Low High
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Freedom 2010 are ranked lower than 4 (%) 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.
 Performance Backtest Predict

## American Funds and Fidelity Freedom Volatility Contrast

 Predicted Return Density
 Returns

## Pair Trading with American Funds and Fidelity Freedom

The main advantage of trading using opposite American Funds and Fidelity Freedom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds 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.
 American Funds vs. State Farm Growth American Funds vs. Income Fund Of American Funds vs. American Mutual Fund American Funds vs. American Mutual Fund
The idea behind American Funds 2010 and Fidelity Freedom 2010 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.
 Fidelity Freedom vs. State Farm Growth Fidelity Freedom vs. Fidelity Freedom 2015 Fidelity Freedom vs. Fidelity Puritan Fund Fidelity Freedom vs. Fidelity Puritan Fund