Correlation Between Aqr Diversified and Franklin Growth
Can any of the company-specific risk be diversified away by investing in both Aqr Diversified and Franklin Growth 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 Aqr Diversified and Franklin Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aqr Diversified Arbitrage and Franklin Growth Allocation, you can compare the effects of market volatilities on Aqr Diversified and Franklin Growth 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 Aqr Diversified with a short position of Franklin Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aqr Diversified and Franklin Growth.
Diversification Opportunities for Aqr Diversified and Franklin Growth
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Aqr and Franklin is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Aqr Diversified Arbitrage and Franklin Growth Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Growth Allo and Aqr Diversified 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 Aqr Diversified Arbitrage are associated (or correlated) with Franklin Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Growth Allo has no effect on the direction of Aqr Diversified i.e., Aqr Diversified and Franklin Growth go up and down completely randomly.
Pair Corralation between Aqr Diversified and Franklin Growth
Assuming the 90 days horizon Aqr Diversified Arbitrage is expected to under-perform the Franklin Growth. But the mutual fund apears to be less risky and, when comparing its historical volatility, Aqr Diversified Arbitrage is 2.45 times less risky than Franklin Growth. The mutual fund trades about -0.12 of its potential returns per unit of risk. The Franklin Growth Allocation is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 1,980 in Franklin Growth Allocation on September 15, 2024 and sell it today you would earn a total of 22.00 from holding Franklin Growth Allocation or generate 1.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aqr Diversified Arbitrage vs. Franklin Growth Allocation
Performance |
| Timeline |
| Aqr Diversified Arbitrage |
| Franklin Growth Allo |
Aqr Diversified and Franklin Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aqr Diversified and Franklin Growth
The main advantage of trading using opposite Aqr Diversified and Franklin Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aqr Diversified position performs unexpectedly, Franklin Growth 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 Franklin Growth will offset losses from the drop in Franklin Growth's long position.| Aqr Diversified vs. Aqr Large Cap | Aqr Diversified vs. Aqr Large Cap | Aqr Diversified vs. Aqr International Defensive | Aqr Diversified vs. Aqr International Defensive |
| Franklin Growth vs. Lord Abbett Diversified | Franklin Growth vs. Aqr Diversified Arbitrage | Franklin Growth vs. Elfun Diversified Fund | Franklin Growth vs. Fulcrum Diversified Absolute |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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