Correlation Between Fidelity Freedom and Gabelli Growth

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Can any of the company-specific risk be diversified away by investing in both Fidelity Freedom and Gabelli Growth 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 Gabelli Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Freedom 2020 and Gabelli Growth Innovators, you can compare the effects of market volatilities on Fidelity Freedom and Gabelli Growth 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 Gabelli Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Freedom and Gabelli Growth.

Diversification Opportunities for Fidelity Freedom and Gabelli Growth

0.78
  Correlation Coefficient

Poor diversification

The 3 months correlation between Fidelity and Gabelli is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Freedom 2020 and Gabelli Growth Innovators in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gabelli Growth Innovators 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 2020 are associated (or correlated) with Gabelli Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gabelli Growth Innovators has no effect on the direction of Fidelity Freedom i.e., Fidelity Freedom and Gabelli Growth go up and down completely randomly.

Pair Corralation between Fidelity Freedom and Gabelli Growth

Assuming the 90 days horizon Fidelity Freedom 2020 is expected to generate 0.31 times more return on investment than Gabelli Growth. However, Fidelity Freedom 2020 is 3.18 times less risky than Gabelli Growth. It trades about 0.28 of its potential returns per unit of risk. Gabelli Growth Innovators is currently generating about 0.05 per unit of risk. If you would invest  1,271  in Fidelity Freedom 2020 on August 30, 2022 and sell it today you would earn a total of  68.00  from holding Fidelity Freedom 2020 or generate 5.35% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Fidelity Freedom 2020  vs.  Gabelli Growth Innovators

 Performance (%) 
       Timeline  
Fidelity Freedom 2020 
Fidelity Performance
0 of 100
Over the last 90 days Fidelity Freedom 2020 has generated negative risk-adjusted returns adding no value to fund investors. 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 Price Channel

Gabelli Growth Innovators 
Gabelli Performance
0 of 100
Over the last 90 days Gabelli Growth Innovators has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Gabelli Growth is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Gabelli Price Channel

Fidelity Freedom and Gabelli Growth Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Fidelity Freedom and Gabelli Growth

The main advantage of trading using opposite Fidelity Freedom and Gabelli Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Freedom position performs unexpectedly, Gabelli Growth 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 Gabelli Growth will offset losses from the drop in Gabelli Growth's long position.
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The idea behind Fidelity Freedom 2020 and Gabelli Growth Innovators 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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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.

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