Correlation Between Fidelity Freedom and Air Lease

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

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

Diversification Opportunities for Fidelity Freedom and Air Lease

0.27

Correlation Coefficient

Fidelity Freedom  Air Lease

Modest diversification

The 3 months correlation between Fidelity and Air is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Freedom Blend and Air Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Lease 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 Blend are associated (or correlated) with Air Lease. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Lease has no effect on the direction of Fidelity Freedom i.e., Fidelity Freedom and Air Lease go up and down completely randomly.

Pair Corralation between Fidelity Freedom and Air Lease

Assuming the 90 days horizon Fidelity Freedom Blend is expected to generate 0.14 times more return on investment than Air Lease. However, Fidelity Freedom Blend is 7.15 times less risky than Air Lease. It trades about 0.38 of its potential returns per unit of risk. Air Lease is currently generating about 0.04 per unit of risk. If you would invest  951.00  in Fidelity Freedom Blend on February 17, 2024 and sell it today you would earn a total of  24.00  from holding Fidelity Freedom Blend or generate 2.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Fidelity Freedom Blend  vs.  Air Lease

Fidelity Freedom Blend

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Freedom Blend 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.

Air Lease

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Air Lease are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite quite weak essential indicators, Air Lease disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fidelity Freedom and Air Lease

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

The idea behind Fidelity Freedom Blend and Air Lease 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.