Correlation Between Fidelity Freedom and T Rowe

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

By analyzing existing cross correlation between Fidelity Freedom 2030 and T Rowe Price, you can compare the effects of market volatilities on Fidelity Freedom and T Rowe 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 T Rowe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Freedom and T Rowe.

Diversification Opportunities for Fidelity Freedom and T Rowe

0.98

Correlation Coefficient

Fidelity Freedom  T Rowe

Almost no diversification

The 3 months correlation between Fidelity and TRRWX is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Freedom 2030 and T Rowe Price in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on T Rowe Price 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 2030 are associated (or correlated) with T Rowe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of T Rowe Price has no effect on the direction of Fidelity Freedom i.e., Fidelity Freedom and T Rowe go up and down completely randomly.

Pair Corralation between Fidelity Freedom and T Rowe

Assuming the 90 days horizon Fidelity Freedom is expected to generate 1.13 times less return on investment than T Rowe. In addition to that, Fidelity Freedom is 1.4 times more volatile than T Rowe Price. It trades about 0.05 of its total potential returns per unit of risk. T Rowe Price is currently generating about 0.07 per unit of volatility. If you would invest  1,412  in T Rowe Price on March 10, 2024 and sell it today you would earn a total of  8.00  from holding T Rowe Price or generate 0.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	95.45%
Values	Daily Returns

Fidelity Freedom 2030  vs.  T Rowe Price

Fidelity Freedom 2030

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Freedom 2030 are ranked lower than 4 (%) 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.

T Rowe Price

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in T Rowe Price are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, T Rowe 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 T Rowe

The main advantage of trading using opposite Fidelity Freedom and T Rowe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Freedom position performs unexpectedly, T Rowe 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 T Rowe will offset losses from the drop in T Rowe's long position.

The idea behind Fidelity Freedom 2030 and T Rowe Price 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.