Correlation Between American Century and Aqr Equity
Can any of the company-specific risk be diversified away by investing in both American Century and Aqr Equity 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 American Century and Aqr Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Century Diversified and Aqr Equity Market, you can compare the effects of market volatilities on American Century and Aqr Equity 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 American Century with a short position of Aqr Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Century and Aqr Equity.
Diversification Opportunities for American Century and Aqr Equity
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between American and Aqr is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding American Century Diversified and Aqr Equity Market in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqr Equity Market and American Century 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 American Century Diversified are associated (or correlated) with Aqr Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aqr Equity Market has no effect on the direction of American Century i.e., American Century and Aqr Equity go up and down completely randomly.
Pair Corralation between American Century and Aqr Equity
Assuming the 90 days horizon American Century Diversified is expected to under-perform the Aqr Equity. But the mutual fund apears to be less risky and, when comparing its historical volatility, American Century Diversified is 1.45 times less risky than Aqr Equity. The mutual fund trades about -0.18 of its potential returns per unit of risk. The Aqr Equity Market is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,049 in Aqr Equity Market on January 12, 2025 and sell it today you would earn a total of 12.00 from holding Aqr Equity Market or generate 1.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
American Century Diversified vs. Aqr Equity Market
Performance |
| Timeline |
| American Century Div |
| Aqr Equity Market |
American Century and Aqr Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Century and Aqr Equity
The main advantage of trading using opposite American Century and Aqr Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Century position performs unexpectedly, Aqr Equity 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 Equity will offset losses from the drop in Aqr Equity's long position.| American Century vs. Goehring Rozencwajg Resources | American Century vs. Jennison Natural Resources | American Century vs. Energy Basic Materials | American Century vs. Thrivent Natural Resources |
| Aqr Equity vs. Aqr Large Cap | Aqr Equity vs. Aqr Large Cap | Aqr Equity vs. Aqr International Defensive | Aqr Equity 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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