Correlation Between Aqr Diversified and Baron Emerging
Can any of the company-specific risk be diversified away by investing in both Aqr Diversified and Baron Emerging 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 Aqr Diversified and Baron Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aqr Diversified Arbitrage and Baron Emerging Markets, you can compare the effects of market volatilities on Aqr Diversified and Baron Emerging 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 Aqr Diversified with a short position of Baron Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aqr Diversified and Baron Emerging.
Diversification Opportunities for Aqr Diversified and Baron Emerging
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Aqr and Baron is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Aqr Diversified Arbitrage and Baron Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baron Emerging Markets and Aqr Diversified 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 Aqr Diversified Arbitrage are associated (or correlated) with Baron Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baron Emerging Markets has no effect on the direction of Aqr Diversified i.e., Aqr Diversified and Baron Emerging go up and down completely randomly.
Pair Corralation between Aqr Diversified and Baron Emerging
Assuming the 90 days horizon Aqr Diversified is expected to generate 2.86 times less return on investment than Baron Emerging. But when comparing it to its historical volatility, Aqr Diversified Arbitrage is 7.61 times less risky than Baron Emerging. It trades about 0.12 of its potential returns per unit of risk. Baron Emerging Markets is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,452 in Baron Emerging Markets on September 1, 2024 and sell it today you would earn a total of 75.00 from holding Baron Emerging Markets or generate 5.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Aqr Diversified Arbitrage vs. Baron Emerging Markets
Performance |
| Timeline |
| Aqr Diversified Arbitrage |
| Baron Emerging Markets |
Aqr Diversified and Baron Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aqr Diversified and Baron Emerging
The main advantage of trading using opposite Aqr Diversified and Baron Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aqr Diversified position performs unexpectedly, Baron Emerging 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 Baron Emerging will offset losses from the drop in Baron Emerging's long position.| Aqr Diversified vs. Aqr Large Cap | Aqr Diversified vs. Aqr Large Cap | Aqr Diversified vs. Aqr International Defensive | Aqr Diversified vs. Aqr International Defensive |
| Baron Emerging vs. Eaton Vance Income | Baron Emerging vs. Baird Aggregate Bond | Baron Emerging vs. Champlain Small | Baron Emerging vs. Mfs Emerging Markets |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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