Correlation Between Ab Bond and Aqr Global
Can any of the company-specific risk be diversified away by investing in both Ab Bond and Aqr Global 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 Ab Bond and Aqr Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ab Bond Inflation and Aqr Global Equity, you can compare the effects of market volatilities on Ab Bond and Aqr Global 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 Ab Bond with a short position of Aqr Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Bond and Aqr Global.
Diversification Opportunities for Ab Bond and Aqr Global
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ABNTX and Aqr is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Ab Bond Inflation and Aqr Global Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqr Global Equity and Ab Bond 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 Ab Bond Inflation are associated (or correlated) with Aqr Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aqr Global Equity has no effect on the direction of Ab Bond i.e., Ab Bond and Aqr Global go up and down completely randomly.
Pair Corralation between Ab Bond and Aqr Global
Assuming the 90 days horizon Ab Bond is expected to generate 7.16 times less return on investment than Aqr Global. But when comparing it to its historical volatility, Ab Bond Inflation is 3.79 times less risky than Aqr Global. It trades about 0.22 of its potential returns per unit of risk. Aqr Global Equity is currently generating about 0.42 of returns per unit of risk over similar time horizon. If you would invest 1,158 in Aqr Global Equity on September 5, 2024 and sell it today you would earn a total of 67.00 from holding Aqr Global Equity or generate 5.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ab Bond Inflation vs. Aqr Global Equity
Performance |
| Timeline |
| Ab Bond Inflation |
| Aqr Global Equity |
Ab Bond and Aqr Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab Bond and Aqr Global
The main advantage of trading using opposite Ab Bond and Aqr Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Bond position performs unexpectedly, Aqr Global 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 Global will offset losses from the drop in Aqr Global's long position.| Ab Bond vs. Qs Large Cap | Ab Bond vs. Transamerica Large Cap | Ab Bond vs. M Large Cap | Ab Bond vs. Fundamental Large Cap |
| Aqr Global vs. Aqr Large Cap | Aqr Global vs. Aqr Large Cap | Aqr Global vs. Aqr International Defensive | Aqr Global vs. Aqr International Defensive |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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