Correlation Between Aqr Large and Aqr Long-short
Can any of the company-specific risk be diversified away by investing in both Aqr Large and Aqr Long-short 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 Large and Aqr Long-short into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aqr Large Cap and Aqr Long Short Equity, you can compare the effects of market volatilities on Aqr Large and Aqr Long-short 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 Large with a short position of Aqr Long-short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aqr Large and Aqr Long-short.
Diversification Opportunities for Aqr Large and Aqr Long-short
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Aqr and Aqr is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Aqr Large Cap and Aqr Long Short Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqr Long Short and Aqr Large 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 Large Cap are associated (or correlated) with Aqr Long-short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aqr Long Short has no effect on the direction of Aqr Large i.e., Aqr Large and Aqr Long-short go up and down completely randomly.
Pair Corralation between Aqr Large and Aqr Long-short
Assuming the 90 days horizon Aqr Large Cap is expected to generate 2.52 times more return on investment than Aqr Long-short. However, Aqr Large is 2.52 times more volatile than Aqr Long Short Equity. It trades about 0.23 of its potential returns per unit of risk. Aqr Long Short Equity is currently generating about 0.58 per unit of risk. If you would invest 2,443 in Aqr Large Cap on August 27, 2024 and sell it today you would earn a total of 128.00 from holding Aqr Large Cap or generate 5.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aqr Large Cap vs. Aqr Long Short Equity
Performance |
| Timeline |
| Aqr Large Cap |
| Aqr Long Short |
Aqr Large and Aqr Long-short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aqr Large and Aqr Long-short
The main advantage of trading using opposite Aqr Large and Aqr Long-short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aqr Large position performs unexpectedly, Aqr Long-short 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 Long-short will offset losses from the drop in Aqr Long-short's long position.| Aqr Large vs. T Rowe Price | Aqr Large vs. Pace Municipal Fixed | Aqr Large vs. Georgia Tax Free Bond | Aqr Large vs. Nuveen All American Municipal |
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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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