Correlation Between Real Estate and Fidelity Freedom

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

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

Diversification Opportunities for Real Estate and Fidelity Freedom

0.47

Correlation Coefficient

Real Estate  Fidelity Freedom

Very weak diversification

The 3 months correlation between Real and Fidelity is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Real Estate Ultrasector and Fidelity Freedom Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Freedom Income and Real Estate 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 Real Estate Ultrasector 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 Income has no effect on the direction of Real Estate i.e., Real Estate and Fidelity Freedom go up and down completely randomly.

Pair Corralation between Real Estate and Fidelity Freedom

Assuming the 90 days horizon Real Estate Ultrasector is expected to under-perform the Fidelity Freedom. In addition to that, Real Estate is 6.05 times more volatile than Fidelity Freedom Income. It trades about -0.01 of its total potential returns per unit of risk. Fidelity Freedom Income is currently generating about 0.22 per unit of volatility. If you would invest  1,076  in Fidelity Freedom Income on May 7, 2025 and sell it today you would earn a total of  34.00  from holding Fidelity Freedom Income or generate 3.16% return on investment over 90 days.

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

Real Estate Ultrasector  vs.  Fidelity Freedom Income

Real Estate Ultrasector

Risk-Adjusted Performance

Weakest

Over the last 90 days Real Estate Ultrasector has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Real Estate is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Fidelity Freedom Income

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Freedom Income are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical indicators, Fidelity Freedom is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Real Estate and Fidelity Freedom

The main advantage of trading using opposite Real Estate and Fidelity Freedom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Real Estate 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 Real Estate Ultrasector and Fidelity Freedom Income 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.