Correlation Between One Choice and Fidelity Freedom

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Can any of the company-specific risk be diversified away by investing in both One Choice 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 One Choice and Fidelity Freedom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between One Choice Blend and Fidelity Freedom 2015, you can compare the effects of market volatilities on One Choice 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 One Choice with a short position of Fidelity Freedom. Check out your portfolio center. Please also check ongoing floating volatility patterns of One Choice and Fidelity Freedom.

Diversification Opportunities for One Choice and Fidelity Freedom

0.97
  Correlation Coefficient

Almost no diversification

The 3 months correlation between AAAFX and Fidelity is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding One Choice Blend and Fidelity Freedom 2015 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Freedom 2015 and One Choice 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 One Choice Blend 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 2015 has no effect on the direction of One Choice i.e., One Choice and Fidelity Freedom go up and down completely randomly.

Pair Corralation between One Choice and Fidelity Freedom

Assuming the 90 days horizon One Choice Blend is expected to generate 0.88 times more return on investment than Fidelity Freedom. However, One Choice Blend is 1.14 times less risky than Fidelity Freedom. It trades about -0.08 of its potential returns per unit of risk. Fidelity Freedom 2015 is currently generating about -0.08 per unit of risk. If you would invest  1,020  in One Choice Blend on March 31, 2022 and sell it today you would lose (112.00)  from holding One Choice Blend or give up 10.98% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy99.6%
ValuesDaily Returns

One Choice Blend  vs.  Fidelity Freedom 2015

 Performance (%) 
      Timeline 
One Choice Blend 
AAAFX Performance
0 of 100
Over the last 90 days One Choice Blend has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest uncertain performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

AAAFX Price Channel

Fidelity Freedom 2015 
Fidelity Performance
0 of 100
Over the last 90 days Fidelity Freedom 2015 has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest uncertain performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Fidelity Price Channel

One Choice and Fidelity Freedom Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with One Choice and Fidelity Freedom

The main advantage of trading using opposite One Choice and Fidelity Freedom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if One Choice 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.

One Choice Blend

Pair trading matchups for One Choice

The idea behind One Choice Blend and Fidelity Freedom 2015 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 2015

Pair trading matchups for Fidelity Freedom

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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.

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