Correlation Between Aqr Long-short and Franklin Lifesmart
Can any of the company-specific risk be diversified away by investing in both Aqr Long-short and Franklin Lifesmart 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 Long-short and Franklin Lifesmart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aqr Long Short Equity and Franklin Lifesmart 2030, you can compare the effects of market volatilities on Aqr Long-short and Franklin Lifesmart 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 Long-short with a short position of Franklin Lifesmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aqr Long-short and Franklin Lifesmart.
Diversification Opportunities for Aqr Long-short and Franklin Lifesmart
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Aqr and Franklin is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Aqr Long Short Equity and Franklin Lifesmart 2030 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Lifesmart 2030 and Aqr Long-short 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 Long Short Equity are associated (or correlated) with Franklin Lifesmart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Lifesmart 2030 has no effect on the direction of Aqr Long-short i.e., Aqr Long-short and Franklin Lifesmart go up and down completely randomly.
Pair Corralation between Aqr Long-short and Franklin Lifesmart
Assuming the 90 days horizon Aqr Long Short Equity is expected to under-perform the Franklin Lifesmart. In addition to that, Aqr Long-short is 2.78 times more volatile than Franklin Lifesmart 2030. It trades about -0.2 of its total potential returns per unit of risk. Franklin Lifesmart 2030 is currently generating about -0.3 per unit of volatility. If you would invest 1,457 in Franklin Lifesmart 2030 on October 7, 2024 and sell it today you would lose (52.00) from holding Franklin Lifesmart 2030 or give up 3.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aqr Long Short Equity vs. Franklin Lifesmart 2030
Performance |
| Timeline |
| Aqr Long Short |
| Franklin Lifesmart 2030 |
Aqr Long-short and Franklin Lifesmart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aqr Long-short and Franklin Lifesmart
The main advantage of trading using opposite Aqr Long-short and Franklin Lifesmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aqr Long-short position performs unexpectedly, Franklin Lifesmart 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 Lifesmart will offset losses from the drop in Franklin Lifesmart's long position.| Aqr Long-short vs. Ab Global Bond | Aqr Long-short vs. Franklin Government Money | Aqr Long-short vs. Maryland Tax Free Bond | Aqr Long-short vs. Pioneer Amt Free Municipal |
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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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