Correlation Between Aqr Sustainable and Franklin Federal
Can any of the company-specific risk be diversified away by investing in both Aqr Sustainable and Franklin Federal 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 Federal 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 Federal Limited Term, you can compare the effects of market volatilities on Aqr Sustainable and Franklin Federal 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 Federal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aqr Sustainable and Franklin Federal.
Diversification Opportunities for Aqr Sustainable and Franklin Federal
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between AQR and Franklin is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Aqr Sustainable Long Short and Franklin Federal Limited Term in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Federal Lim 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 Federal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Federal Lim has no effect on the direction of Aqr Sustainable i.e., Aqr Sustainable and Franklin Federal go up and down completely randomly.
Pair Corralation between Aqr Sustainable and Franklin Federal
Assuming the 90 days horizon Aqr Sustainable Long Short is expected to generate 6.78 times more return on investment than Franklin Federal. However, Aqr Sustainable is 6.78 times more volatile than Franklin Federal Limited Term. It trades about 0.26 of its potential returns per unit of risk. Franklin Federal Limited Term is currently generating about 0.15 per unit of risk. If you would invest 1,428 in Aqr Sustainable Long Short on September 1, 2024 and sell it today you would earn a total of 65.00 from holding Aqr Sustainable Long Short or generate 4.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aqr Sustainable Long Short vs. Franklin Federal Limited Term
Performance |
| Timeline |
| Aqr Sustainable Long |
| Franklin Federal Lim |
Aqr Sustainable and Franklin Federal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aqr Sustainable and Franklin Federal
The main advantage of trading using opposite Aqr Sustainable and Franklin Federal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aqr Sustainable position performs unexpectedly, Franklin Federal 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 Federal will offset losses from the drop in Franklin Federal's long position.| Aqr Sustainable vs. Aqr Large Cap | Aqr Sustainable vs. Aqr Large Cap | Aqr Sustainable vs. Aqr International Defensive | Aqr Sustainable vs. Aqr International Defensive |
| Franklin Federal vs. Small Midcap Dividend Income | Franklin Federal vs. Tax Managed Mid Small | Franklin Federal vs. Touchstone Small Cap | Franklin Federal vs. Jpmorgan Small Cap |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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