Correlation Between Blackrock Lifepth and Fidelity Freedom

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

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

Diversification Opportunities for Blackrock Lifepth and Fidelity Freedom

0.99

Correlation Coefficient

Blackrock Lifepth  Fidelity Freedom

No risk reduction

The 3 months correlation between Blackrock and Fidelity is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Lifepth Idx and Fidelity Freedom Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Freedom and Blackrock Lifepth 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 Blackrock Lifepth Idx 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 has no effect on the direction of Blackrock Lifepth i.e., Blackrock Lifepth and Fidelity Freedom go up and down completely randomly.

Pair Corralation between Blackrock Lifepth and Fidelity Freedom

Assuming the 90 days horizon Blackrock Lifepth Idx is expected to generate 1.32 times more return on investment than Fidelity Freedom. However, Blackrock Lifepth is 1.32 times more volatile than Fidelity Freedom Income. It trades about 0.01 of its potential returns per unit of risk. Fidelity Freedom Income is currently generating about 0.02 per unit of risk. If you would invest  1,312  in Blackrock Lifepth Idx on January 24, 2024 and sell it today you would earn a total of  4.00  from holding Blackrock Lifepth Idx or generate 0.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.41%
Values	Daily Returns

Blackrock Lifepth Idx  vs.  Fidelity Freedom Income

Blackrock Lifepth Idx

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Lifepth Idx are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward-looking signals, Blackrock Lifepth is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Fidelity Freedom

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Freedom Income are ranked lower than 1 (%) 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 Blackrock Lifepth and Fidelity Freedom

The main advantage of trading using opposite Blackrock Lifepth and Fidelity Freedom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blackrock Lifepth 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 Blackrock Lifepth Idx and Fidelity Freedom Income 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.