Correlation Between Fidelity Freedom and Strategic Advisers

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

By analyzing existing cross correlation between Fidelity Freedom 2015 and Strategic Advisers Emerging, you can compare the effects of market volatilities on Fidelity Freedom and Strategic Advisers 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 Strategic Advisers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Freedom and Strategic Advisers.

Diversification Opportunities for Fidelity Freedom and Strategic Advisers

0.97

Correlation Coefficient

Fidelity Freedom  Strategic Advisers

Almost no diversification

The 3 months correlation between Fidelity and Strategic is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Freedom 2015 and Strategic Advisers Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strategic Advisers 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 2015 are associated (or correlated) with Strategic Advisers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strategic Advisers has no effect on the direction of Fidelity Freedom i.e., Fidelity Freedom and Strategic Advisers go up and down completely randomly.

Pair Corralation between Fidelity Freedom and Strategic Advisers

Assuming the 90 days horizon Fidelity Freedom is expected to generate 2.57 times less return on investment than Strategic Advisers. But when comparing it to its historical volatility, Fidelity Freedom 2015 is 2.42 times less risky than Strategic Advisers. It trades about 0.29 of its potential returns per unit of risk. Strategic Advisers Emerging is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest  1,136  in Strategic Advisers Emerging on May 1, 2025 and sell it today you would earn a total of  162.00  from holding Strategic Advisers Emerging or generate 14.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Fidelity Freedom 2015  vs.  Strategic Advisers Emerging

Fidelity Freedom 2015

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Freedom 2015 are ranked lower than 22 (%) of all funds and portfolios of funds over the last 90 days. 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.

Strategic Advisers

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Strategic Advisers Emerging are ranked lower than 24 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak primary indicators, Strategic Advisers showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fidelity Freedom and Strategic Advisers

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

The idea behind Fidelity Freedom 2015 and Strategic Advisers Emerging 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.