diversifiable risk of combining AQR LONG and Fidelity Freedom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AQR LONG SHORT EQUITY and Fidelity Freedom Index, you can compare the effects of market volatilities on AQR LONG 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 AQR LONG with a short position of Fidelity Freedom. Check out your portfolio center. Please also check ongoing floating volatility patterns of AQR LONG and Fidelity Freedom.
Diversification Opportunities for AQR LONG and Fidelity Freedom
Pair Corralation between AQR LONG and Fidelity Freedom
AQR LONG-SHORT EQUITY vs. Fidelity Freedom Index
AQR LONG and Fidelity Freedom Volatility Contrast
Pair Trading with AQR LONG and Fidelity FreedomThe main advantage of trading using opposite AQR LONG and Fidelity Freedom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AQR LONG 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 AQR LONG SHORT EQUITY and Fidelity Freedom Index 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.