Correlation Between Franklin Mutual and Aqr Diversified
Can any of the company-specific risk be diversified away by investing in both Franklin Mutual and Aqr Diversified 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 Franklin Mutual and Aqr Diversified into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Mutual European and Aqr Diversified Arbitrage, you can compare the effects of market volatilities on Franklin Mutual and Aqr Diversified 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 Franklin Mutual with a short position of Aqr Diversified. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Mutual and Aqr Diversified.
Diversification Opportunities for Franklin Mutual and Aqr Diversified
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Franklin and Aqr is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Mutual European and Aqr Diversified Arbitrage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqr Diversified Arbitrage and Franklin Mutual 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 Franklin Mutual European are associated (or correlated) with Aqr Diversified. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aqr Diversified Arbitrage has no effect on the direction of Franklin Mutual i.e., Franklin Mutual and Aqr Diversified go up and down completely randomly.
Pair Corralation between Franklin Mutual and Aqr Diversified
Assuming the 90 days horizon Franklin Mutual European is expected to generate 3.41 times more return on investment than Aqr Diversified. However, Franklin Mutual is 3.41 times more volatile than Aqr Diversified Arbitrage. It trades about 0.05 of its potential returns per unit of risk. Aqr Diversified Arbitrage is currently generating about 0.06 per unit of risk. If you would invest 1,993 in Franklin Mutual European on September 3, 2024 and sell it today you would earn a total of 446.00 from holding Franklin Mutual European or generate 22.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Mutual European vs. Aqr Diversified Arbitrage
Performance |
| Timeline |
| Franklin Mutual European |
| Aqr Diversified Arbitrage |
Franklin Mutual and Aqr Diversified Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Mutual and Aqr Diversified
The main advantage of trading using opposite Franklin Mutual and Aqr Diversified positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Mutual position performs unexpectedly, Aqr Diversified 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 Aqr Diversified will offset losses from the drop in Aqr Diversified's long position.| Franklin Mutual vs. Aqr Diversified Arbitrage | Franklin Mutual vs. Delaware Limited Term Diversified | Franklin Mutual vs. Jhancock Diversified Macro | Franklin Mutual vs. Pgim Conservative Retirement |
| Aqr Diversified vs. Eip Growth And | Aqr Diversified vs. Mid Cap Growth | Aqr Diversified vs. Smallcap Growth Fund | Aqr Diversified vs. Qs Growth Fund |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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