Correlation Between Fidelity Freedom and Blackrock Lifepath

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

By analyzing existing cross correlation between Fidelity Freedom 2050 and Blackrock Lifepath Idx, you can compare the effects of market volatilities on Fidelity Freedom and Blackrock Lifepath 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 Blackrock Lifepath. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Freedom and Blackrock Lifepath.

Diversification Opportunities for Fidelity Freedom and Blackrock Lifepath

0.99

Correlation Coefficient

Fidelity Freedom  Blackrock Lifepath

No risk reduction

The 3 months correlation between Fidelity and Blackrock is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Freedom 2050 and Blackrock Lifepath Idx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Lifepath Idx 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 2050 are associated (or correlated) with Blackrock Lifepath. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Lifepath Idx has no effect on the direction of Fidelity Freedom i.e., Fidelity Freedom and Blackrock Lifepath go up and down completely randomly.

Pair Corralation between Fidelity Freedom and Blackrock Lifepath

Assuming the 90 days horizon Fidelity Freedom is expected to generate 1.01 times less return on investment than Blackrock Lifepath. But when comparing it to its historical volatility, Fidelity Freedom 2050 is 1.08 times less risky than Blackrock Lifepath. It trades about 0.05 of its potential returns per unit of risk. Blackrock Lifepath Idx is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,861  in Blackrock Lifepath Idx on February 24, 2024 and sell it today you would earn a total of  422.00  from holding Blackrock Lifepath Idx or generate 22.68% 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 2050  vs.  Blackrock Lifepath Idx

Fidelity Freedom 2050

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Freedom 2050 are ranked lower than 8 (%) 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.

Blackrock Lifepath Idx

Risk-Adjusted Performance

7 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Lifepath Idx are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Blackrock Lifepath 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 Blackrock Lifepath

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

The idea behind Fidelity Freedom 2050 and Blackrock Lifepath Idx 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.