Correlation Between Franklin Federal and Aqr International
Can any of the company-specific risk be diversified away by investing in both Franklin Federal 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 Federal 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 Federal Limited Term and Aqr International Defensive, you can compare the effects of market volatilities on Franklin Federal 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 Federal with a short position of Aqr International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Federal and Aqr International.
Diversification Opportunities for Franklin Federal and Aqr International
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Franklin and Aqr is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Federal Limited Term 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 Federal 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 Federal Limited Term 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 Federal i.e., Franklin Federal and Aqr International go up and down completely randomly.
Pair Corralation between Franklin Federal and Aqr International
Assuming the 90 days horizon Franklin Federal Limited Term is expected to generate 0.17 times more return on investment than Aqr International. However, Franklin Federal Limited Term is 5.83 times less risky than Aqr International. It trades about -0.05 of its potential returns per unit of risk. Aqr International Defensive is currently generating about -0.23 per unit of risk. If you would invest 1,030 in Franklin Federal Limited Term on September 24, 2024 and sell it today you would lose (4.00) from holding Franklin Federal Limited Term or give up 0.39% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Franklin Federal Limited Term vs. Aqr International Defensive
Performance |
Timeline |
Franklin Federal Lim |
Aqr International |
Franklin Federal and Aqr International Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Franklin Federal and Aqr International
The main advantage of trading using opposite Franklin Federal and Aqr International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Federal 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 Federal vs. Huber Capital Diversified | Franklin Federal vs. Davenport Small Cap | Franklin Federal vs. Delaware Limited Term Diversified | Franklin Federal vs. Blackrock Sm Cap |
Aqr International vs. Virtus Multi Sector Short | Aqr International vs. Franklin Federal Limited Term | Aqr International vs. Blackrock Short Term Inflat Protected | Aqr International vs. Lord Abbett Short |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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