Correlation Between Fidelity Freedom and Moderate Balanced

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

By analyzing existing cross correlation between Fidelity Freedom 2060 and Moderate Balanced Allocation, you can compare the effects of market volatilities on Fidelity Freedom and Moderate Balanced 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 Moderate Balanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Freedom and Moderate Balanced.

Diversification Opportunities for Fidelity Freedom and Moderate Balanced

0.66

Correlation Coefficient

Fidelity Freedom  Moderate Balanced

Poor diversification

The 3 months correlation between Fidelity and Moderate is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Freedom 2060 and Moderate Balanced Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Moderate Balanced 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 2060 are associated (or correlated) with Moderate Balanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Moderate Balanced has no effect on the direction of Fidelity Freedom i.e., Fidelity Freedom and Moderate Balanced go up and down completely randomly.

Pair Corralation between Fidelity Freedom and Moderate Balanced

Assuming the 90 days horizon Fidelity Freedom 2060 is expected to generate 1.26 times more return on investment than Moderate Balanced. However, Fidelity Freedom is 1.26 times more volatile than Moderate Balanced Allocation. It trades about 0.22 of its potential returns per unit of risk. Moderate Balanced Allocation is currently generating about 0.19 per unit of risk. If you would invest  1,514  in Fidelity Freedom 2060 on May 17, 2025 and sell it today you would earn a total of  120.00  from holding Fidelity Freedom 2060 or generate 7.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

Fidelity Freedom 2060  vs.  Moderate Balanced Allocation

Fidelity Freedom 2060

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Freedom 2060 are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Fidelity Freedom may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Moderate Balanced

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Moderate Balanced Allocation are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Moderate Balanced is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Fidelity Freedom and Moderate Balanced

The main advantage of trading using opposite Fidelity Freedom and Moderate Balanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Freedom position performs unexpectedly, Moderate Balanced 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 Moderate Balanced will offset losses from the drop in Moderate Balanced's long position.

The idea behind Fidelity Freedom 2060 and Moderate Balanced Allocation 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.