Correlation Between Franklin Natural and Aqr Long
Can any of the company-specific risk be diversified away by investing in both Franklin Natural and Aqr Long 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 Franklin Natural and Aqr Long into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Natural Resources and Aqr Long Short Equity, you can compare the effects of market volatilities on Franklin Natural and Aqr Long 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 Franklin Natural with a short position of Aqr Long. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Natural and Aqr Long.
Diversification Opportunities for Franklin Natural and Aqr Long
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Franklin and Aqr is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Natural Resources and Aqr Long Short Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqr Long Short and Franklin Natural 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 Franklin Natural Resources are associated (or correlated) with Aqr Long. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aqr Long Short has no effect on the direction of Franklin Natural i.e., Franklin Natural and Aqr Long go up and down completely randomly.
Pair Corralation between Franklin Natural and Aqr Long
Assuming the 90 days horizon Franklin Natural Resources is expected to under-perform the Aqr Long. In addition to that, Franklin Natural is 1.72 times more volatile than Aqr Long Short Equity. It trades about -0.11 of its total potential returns per unit of risk. Aqr Long Short Equity is currently generating about 0.21 per unit of volatility. If you would invest 1,627 in Aqr Long Short Equity on September 12, 2024 and sell it today you would earn a total of 36.00 from holding Aqr Long Short Equity or generate 2.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Natural Resources vs. Aqr Long Short Equity
Performance |
| Timeline |
| Franklin Natural Res |
| Aqr Long Short |
Franklin Natural and Aqr Long Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Natural and Aqr Long
The main advantage of trading using opposite Franklin Natural and Aqr Long positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Natural position performs unexpectedly, Aqr Long 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 Aqr Long will offset losses from the drop in Aqr Long's long position.| Franklin Natural vs. Victory Rs Partners | Franklin Natural vs. Queens Road Small | Franklin Natural vs. Royce Opportunity Fund | Franklin Natural vs. Pace Smallmedium Value |
| Aqr Long vs. Diamond Hill Long Short | Aqr Long vs. Pimco Rae Worldwide | Aqr Long vs. SCOR PK | Aqr Long vs. Morningstar Unconstrained Allocation |
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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
Other Complementary Tools
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum |