Correlation Between Fidelity Freedom and Voya Solution

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

By analyzing existing cross correlation between Fidelity Freedom 2055 and Voya Solution 2055, you can compare the effects of market volatilities on Fidelity Freedom and Voya Solution 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 Voya Solution. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Freedom and Voya Solution.

Diversification Opportunities for Fidelity Freedom and Voya Solution

0.92

Correlation Coefficient

Fidelity Freedom  Voya Solution

Almost no diversification

The 3 months correlation between Fidelity and Voya is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Freedom 2055 and Voya Solution 2055 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Solution 2055 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 2055 are associated (or correlated) with Voya Solution. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya Solution 2055 has no effect on the direction of Fidelity Freedom i.e., Fidelity Freedom and Voya Solution go up and down completely randomly.

Pair Corralation between Fidelity Freedom and Voya Solution

Assuming the 90 days horizon Fidelity Freedom 2055 is expected to generate 1.03 times more return on investment than Voya Solution. However, Fidelity Freedom is 1.03 times more volatile than Voya Solution 2055. It trades about 0.27 of its potential returns per unit of risk. Voya Solution 2055 is currently generating about 0.26 per unit of risk. If you would invest  1,476  in Fidelity Freedom 2055 on February 15, 2024 and sell it today you would earn a total of  60.00  from holding Fidelity Freedom 2055 or generate 4.07% 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 2055  vs.  Voya Solution 2055

Fidelity Freedom 2055

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Freedom 2055 are ranked lower than 10 (%) 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.

Voya Solution 2055

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Voya Solution 2055 are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Voya Solution is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Fidelity Freedom and Voya Solution

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

The idea behind Fidelity Freedom 2055 and Voya Solution 2055 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.