Correlation Between Chevron Corp and Fidelity Freedom

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

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

Diversification Opportunities for Chevron Corp and Fidelity Freedom

-0.09

Correlation Coefficient

Chevron Corp  Fidelity Freedom

Good diversification

The 3 months correlation between Chevron and Fidelity is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Chevron Corp and Fidelity Freedom Blend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Freedom Blend and Chevron Corp 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 Chevron Corp 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 Blend has no effect on the direction of Chevron Corp i.e., Chevron Corp and Fidelity Freedom go up and down completely randomly.

Pair Corralation between Chevron Corp and Fidelity Freedom

Considering the 90-day investment horizon Chevron Corp is expected to generate 3.5 times less return on investment than Fidelity Freedom. In addition to that, Chevron Corp is 3.37 times more volatile than Fidelity Freedom Blend. It trades about 0.03 of its total potential returns per unit of risk. Fidelity Freedom Blend is currently generating about 0.38 per unit of volatility. If you would invest  951.00  in Fidelity Freedom Blend on February 20, 2024 and sell it today you would earn a total of  23.00  from holding Fidelity Freedom Blend or generate 2.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Chevron Corp  vs.  Fidelity Freedom Blend

Chevron Corp

Risk-Adjusted Performance

9 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Chevron Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Chevron Corp may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Fidelity Freedom Blend

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Freedom Blend are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental 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 Chevron Corp and Fidelity Freedom

The main advantage of trading using opposite Chevron Corp and Fidelity Freedom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chevron Corp 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 Chevron Corp and Fidelity Freedom Blend 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.