Correlation Between Fidelity Freedom and Fidelity Sai

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Can any of the company-specific risk be diversified away by investing in both Fidelity Freedom and Fidelity Sai 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 Sai 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 Sai Long Term, you can compare the effects of market volatilities on Fidelity Freedom and Fidelity Sai 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 Sai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Freedom and Fidelity Sai.

Diversification Opportunities for Fidelity Freedom and Fidelity Sai

0.08
  Correlation Coefficient

Significant diversification

The 3 months correlation between Fidelity and Fidelity is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Freedom 2015 and Fidelity Sai Long Term in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Sai Long 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 Sai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Sai Long has no effect on the direction of Fidelity Freedom i.e., Fidelity Freedom and Fidelity Sai go up and down completely randomly.

Pair Corralation between Fidelity Freedom and Fidelity Sai

Assuming the 90 days horizon Fidelity Freedom 2015 is expected to generate 0.39 times more return on investment than Fidelity Sai. However, Fidelity Freedom 2015 is 2.57 times less risky than Fidelity Sai. It trades about -0.21 of its potential returns per unit of risk. Fidelity Sai Long Term is currently generating about -0.17 per unit of risk. If you would invest  1,131  in Fidelity Freedom 2015 on January 19, 2024 and sell it today you would lose (19.00) from holding Fidelity Freedom 2015 or give up 1.68% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Fidelity Freedom 2015  vs.  Fidelity Sai Long Term

 Performance 
       Timeline  
Fidelity Freedom 2015 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Freedom 2015 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.
Fidelity Sai Long 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Fidelity Sai Long Term has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Fidelity Sai is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Fidelity Freedom and Fidelity Sai Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Fidelity Freedom and Fidelity Sai

The main advantage of trading using opposite Fidelity Freedom and Fidelity Sai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Freedom position performs unexpectedly, Fidelity Sai 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 Sai will offset losses from the drop in Fidelity Sai's long position.
The idea behind Fidelity Freedom 2015 and Fidelity Sai Long Term 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.
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.

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