Correlation Between Aqr Sustainable and Franklin Natural
Can any of the company-specific risk be diversified away by investing in both Aqr Sustainable and Franklin Natural 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 Sustainable and Franklin Natural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aqr Sustainable Long Short and Franklin Natural Resources, you can compare the effects of market volatilities on Aqr Sustainable and Franklin Natural 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 Sustainable with a short position of Franklin Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aqr Sustainable and Franklin Natural.
Diversification Opportunities for Aqr Sustainable and Franklin Natural
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Aqr and Franklin is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Aqr Sustainable Long Short and Franklin Natural Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Natural Res and Aqr Sustainable 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 Sustainable Long Short are associated (or correlated) with Franklin Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Natural Res has no effect on the direction of Aqr Sustainable i.e., Aqr Sustainable and Franklin Natural go up and down completely randomly.
Pair Corralation between Aqr Sustainable and Franklin Natural
Assuming the 90 days horizon Aqr Sustainable is expected to generate 3.09 times less return on investment than Franklin Natural. But when comparing it to its historical volatility, Aqr Sustainable Long Short is 1.5 times less risky than Franklin Natural. It trades about 0.18 of its potential returns per unit of risk. Franklin Natural Resources is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest 2,825 in Franklin Natural Resources on October 30, 2024 and sell it today you would earn a total of 163.00 from holding Franklin Natural Resources or generate 5.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aqr Sustainable Long Short vs. Franklin Natural Resources
Performance |
| Timeline |
| Aqr Sustainable Long |
| Franklin Natural Res |
Aqr Sustainable and Franklin Natural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aqr Sustainable and Franklin Natural
The main advantage of trading using opposite Aqr Sustainable and Franklin Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aqr Sustainable position performs unexpectedly, Franklin Natural 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 Natural will offset losses from the drop in Franklin Natural's long position.| Aqr Sustainable vs. Artisan Select Equity | Aqr Sustainable vs. Calvert International Equity | Aqr Sustainable vs. Qs Global Equity | Aqr Sustainable vs. Siit Equity Factor |
| Franklin Natural vs. Towpath Technology | Franklin Natural vs. Vanguard Information Technology | Franklin Natural vs. Goldman Sachs Technology | Franklin Natural vs. Columbia Global Technology |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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