Correlation Between Federated Global and Fidelity Freedom

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

By analyzing existing cross correlation between Federated Global Allocation and Fidelity Freedom Index, you can compare the effects of market volatilities on Federated Global 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 Federated Global with a short position of Fidelity Freedom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Global and Fidelity Freedom.

Diversification Opportunities for Federated Global and Fidelity Freedom

1.0

Correlation Coefficient

Federated Global  Fidelity Freedom

No risk reduction

The 3 months correlation between Federated and Fidelity is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Federated Global Allocation and Fidelity Freedom Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Freedom Index and Federated Global 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 Federated Global Allocation 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 Index has no effect on the direction of Federated Global i.e., Federated Global and Fidelity Freedom go up and down completely randomly.

Pair Corralation between Federated Global and Fidelity Freedom

Assuming the 90 days horizon Federated Global is expected to generate 1.06 times less return on investment than Fidelity Freedom. In addition to that, Federated Global is 1.0 times more volatile than Fidelity Freedom Index. It trades about 0.25 of its total potential returns per unit of risk. Fidelity Freedom Index is currently generating about 0.27 per unit of volatility. If you would invest  2,406  in Fidelity Freedom Index on May 21, 2025 and sell it today you would earn a total of  168.00  from holding Fidelity Freedom Index or generate 6.98% return on investment over 90 days.

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

Federated Global Allocation  vs.  Fidelity Freedom Index

Federated Global All

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Federated Global Allocation are ranked lower than 19 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Federated Global may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Fidelity Freedom Index

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Freedom Index are ranked lower than 20 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Fidelity Freedom may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Federated Global and Fidelity Freedom

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

The idea behind Federated Global Allocation and Fidelity Freedom Index 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.