Correlation Between Aqr Long-short and Franklin Mutual
Can any of the company-specific risk be diversified away by investing in both Aqr Long-short and Franklin Mutual 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 Mutual 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 Mutual Beacon, you can compare the effects of market volatilities on Aqr Long-short and Franklin Mutual 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 Mutual. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aqr Long-short and Franklin Mutual.
Diversification Opportunities for Aqr Long-short and Franklin Mutual
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Aqr and Franklin is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Aqr Long Short Equity and Franklin Mutual Beacon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Mutual Beacon 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 Mutual. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Mutual Beacon has no effect on the direction of Aqr Long-short i.e., Aqr Long-short and Franklin Mutual go up and down completely randomly.
Pair Corralation between Aqr Long-short and Franklin Mutual
Assuming the 90 days horizon Aqr Long Short Equity is expected to generate 0.38 times more return on investment than Franklin Mutual. However, Aqr Long Short Equity is 2.61 times less risky than Franklin Mutual. It trades about 0.13 of its potential returns per unit of risk. Franklin Mutual Beacon is currently generating about -0.39 per unit of risk. If you would invest 1,567 in Aqr Long Short Equity on October 14, 2024 and sell it today you would earn a total of 19.00 from holding Aqr Long Short Equity or generate 1.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aqr Long Short Equity vs. Franklin Mutual Beacon
Performance |
| Timeline |
| Aqr Long Short |
| Franklin Mutual Beacon |
Aqr Long-short and Franklin Mutual Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aqr Long-short and Franklin Mutual
The main advantage of trading using opposite Aqr Long-short and Franklin Mutual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aqr Long-short position performs unexpectedly, Franklin Mutual 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 Mutual will offset losses from the drop in Franklin Mutual's long position.| Aqr Long-short vs. Artisan Developing World | Aqr Long-short vs. Alphacentric Hedged Market | Aqr Long-short vs. T Rowe Price | Aqr Long-short vs. Oshaughnessy Market Leaders |
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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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