Correlation Between Fidelity Freedom and Fidelity Advisor

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

By analyzing existing cross correlation between Fidelity Freedom 2070 and Fidelity Advisor Equity, you can compare the effects of market volatilities on Fidelity Freedom and Fidelity Advisor 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 Fidelity Advisor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Freedom and Fidelity Advisor.

Diversification Opportunities for Fidelity Freedom and Fidelity Advisor

0.99

Correlation Coefficient

Fidelity Freedom  Fidelity Advisor

No risk reduction

The 3 months correlation between Fidelity and Fidelity is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Freedom 2070 and Fidelity Advisor Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Advisor Equity 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 2070 are associated (or correlated) with Fidelity Advisor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Advisor Equity has no effect on the direction of Fidelity Freedom i.e., Fidelity Freedom and Fidelity Advisor go up and down completely randomly.

Pair Corralation between Fidelity Freedom and Fidelity Advisor

Assuming the 90 days horizon Fidelity Freedom is expected to generate 1.65 times less return on investment than Fidelity Advisor. But when comparing it to its historical volatility, Fidelity Freedom 2070 is 1.46 times less risky than Fidelity Advisor. It trades about 0.23 of its potential returns per unit of risk. Fidelity Advisor Equity is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  2,221  in Fidelity Advisor Equity on May 6, 2025 and sell it today you would earn a total of  328.00  from holding Fidelity Advisor Equity or generate 14.77% 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 2070  vs.  Fidelity Advisor Equity

Fidelity Freedom 2070

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Freedom 2070 are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Fidelity Freedom may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Fidelity Advisor Equity

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Advisor Equity are ranked lower than 20 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Fidelity Advisor showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fidelity Freedom and Fidelity Advisor

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

The idea behind Fidelity Freedom 2070 and Fidelity Advisor Equity 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..