Correlation Between Franklin and Aqr Alternative

Can any of the company-specific risk be diversified away by investing in both Franklin and Aqr Alternative 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 and Aqr Alternative into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Franklin Government Money and Aqr Alternative Risk, you can compare the effects of market volatilities on Franklin and Aqr Alternative 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 with a short position of Aqr Alternative. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin and Aqr Alternative.

Diversification Opportunities for Franklin and Aqr Alternative

0.62

Correlation Coefficient

Franklin  Aqr Alternative

Poor diversification

The 3 months correlation between Franklin and Aqr is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Government Money and Aqr Alternative Risk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqr Alternative Risk and Franklin 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 Government Money are associated (or correlated) with Aqr Alternative. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aqr Alternative Risk has no effect on the direction of Franklin i.e., Franklin and Aqr Alternative go up and down completely randomly.

Pair Corralation between Franklin and Aqr Alternative

If you would invest  1,120  in Aqr Alternative Risk on October 27, 2024 and sell it today you would earn a total of  49.00  from holding Aqr Alternative Risk or generate 4.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Franklin Government Money  vs.  Aqr Alternative Risk

Franklin Government Money

Risk-Adjusted Performance

10 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Government Money are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Franklin is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Aqr Alternative Risk

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aqr Alternative Risk are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Aqr Alternative may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Franklin and Aqr Alternative

The main advantage of trading using opposite Franklin and Aqr Alternative positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin position performs unexpectedly, Aqr Alternative 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 Alternative will offset losses from the drop in Aqr Alternative's long position.

The idea behind Franklin Government Money and Aqr Alternative Risk pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.