diversifiable risk of combining Fidelity Freedom and American Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Freedom 2010 and American Funds 2010, you can compare the effects of market volatilities on Fidelity Freedom and American Funds 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 American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Freedom and American Funds.
Diversification Opportunities for Fidelity Freedom and American Funds
Pair Corralation between Fidelity Freedom and American Funds
Assuming the 90 days horizon Fidelity Freedom 2010 is expected to generate 0.88 times more return on investment than American Funds. However, Fidelity Freedom 2010 is 1.14 times less risky than American Funds. It trades about 0.02 of its potential returns per unit of risk. American Funds 2010 is currently generating about 0.0 per unit of risk. If you would invest 1,350 in Fidelity Freedom 2010 on December 1, 2023 and sell it today you would earn a total of 8.00 from holding Fidelity Freedom 2010 or generate 0.59% return on investment over 90 days.
FIDELITY FREEDOM 2010 vs. AMERICAN FUNDS 2010
Fidelity Freedom and American Funds Volatility Contrast
Pair Trading with Fidelity Freedom and American FundsThe main advantage of trading using opposite Fidelity Freedom and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Freedom position performs unexpectedly, American Funds 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 American Funds will offset losses from the drop in American Funds' long position. The idea behind Fidelity Freedom 2010 and American Funds 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.
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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