Correlation Between Dodge Cox and Fidelity Freedom
Can any of the company-specific risk be diversified away by investing in both Dodge Cox 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 Dodge Cox and Fidelity Freedom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dodge Cox Stock and Fidelity Freedom Blend, you can compare the effects of market volatilities on Dodge Cox 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 Dodge Cox with a short position of Fidelity Freedom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dodge Cox and Fidelity Freedom.
Diversification Opportunities for Dodge Cox and Fidelity Freedom
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dodge and Fidelity is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Dodge Cox Stock 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 Dodge Cox 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 Dodge Cox Stock 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 Dodge Cox i.e., Dodge Cox and Fidelity Freedom go up and down completely randomly.
Pair Corralation between Dodge Cox and Fidelity Freedom
Assuming the 90 days horizon Dodge Cox is expected to generate 1.68 times less return on investment than Fidelity Freedom. In addition to that, Dodge Cox is 1.03 times more volatile than Fidelity Freedom Blend. It trades about 0.19 of its total potential returns per unit of risk. Fidelity Freedom Blend is currently generating about 0.33 per unit of volatility. If you would invest 1,113 in Fidelity Freedom Blend on February 23, 2024 and sell it today you would earn a total of 45.00 from holding Fidelity Freedom Blend or generate 4.04% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 95.65% |
Values | Daily Returns |
Dodge Cox Stock vs. Fidelity Freedom Blend
Performance |
Timeline |
Dodge Cox Stock |
Fidelity Freedom Blend |
Dodge Cox and Fidelity Freedom Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Dodge Cox and Fidelity Freedom
The main advantage of trading using opposite Dodge Cox and Fidelity Freedom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dodge Cox 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.Dodge Cox vs. Vanguard Value Index | Dodge Cox vs. American Funds American | Dodge Cox vs. American Mutual Fund | Dodge Cox vs. American Mutual Fund |
Fidelity Freedom vs. Vanguard Target Retirement | Fidelity Freedom vs. American Funds 2035 | Fidelity Freedom vs. Fidelity Freedom 2035 | Fidelity Freedom vs. Fidelity Freedom Index |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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