Correlation Between Franklin High and Aqr International
Can any of the company-specific risk be diversified away by investing in both Franklin High and Aqr International 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 High and Aqr International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin High Yield and Aqr International Defensive, you can compare the effects of market volatilities on Franklin High and Aqr International 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 High with a short position of Aqr International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin High and Aqr International.
Diversification Opportunities for Franklin High and Aqr International
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Franklin and Aqr is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Franklin High Yield and Aqr International Defensive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqr International and Franklin High 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 High Yield are associated (or correlated) with Aqr International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aqr International has no effect on the direction of Franklin High i.e., Franklin High and Aqr International go up and down completely randomly.
Pair Corralation between Franklin High and Aqr International
Assuming the 90 days horizon Franklin High Yield is expected to under-perform the Aqr International. But the mutual fund apears to be less risky and, when comparing its historical volatility, Franklin High Yield is 2.51 times less risky than Aqr International. The mutual fund trades about -0.01 of its potential returns per unit of risk. The Aqr International Defensive is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 1,457 in Aqr International Defensive on December 28, 2024 and sell it today you would earn a total of 106.00 from holding Aqr International Defensive or generate 7.28% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Franklin High Yield vs. Aqr International Defensive
Performance |
Timeline |
Franklin High Yield |
Aqr International |
Franklin High and Aqr International Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Franklin High and Aqr International
The main advantage of trading using opposite Franklin High and Aqr International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin High position performs unexpectedly, Aqr International 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 International will offset losses from the drop in Aqr International's long position.Franklin High vs. Madison Diversified Income | Franklin High vs. Massmutual Premier Diversified | Franklin High vs. Voya Solution Conservative | Franklin High vs. Timothy Plan Conservative |
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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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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