Correlation Between Aqr Large and Global Small
Can any of the company-specific risk be diversified away by investing in both Aqr Large and Global Small 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 Global Small 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 Global Small Cap, you can compare the effects of market volatilities on Aqr Large and Global Small 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 Global Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aqr Large and Global Small.
Diversification Opportunities for Aqr Large and Global Small
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Aqr and Global is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Aqr Large Cap and Global Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Small Cap 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 Global Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Small Cap has no effect on the direction of Aqr Large i.e., Aqr Large and Global Small go up and down completely randomly.
Pair Corralation between Aqr Large and Global Small
Assuming the 90 days horizon Aqr Large is expected to generate 1.07 times less return on investment than Global Small. But when comparing it to its historical volatility, Aqr Large Cap is 1.02 times less risky than Global Small. It trades about 0.22 of its potential returns per unit of risk. Global Small Cap is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 1,890 in Global Small Cap on August 29, 2024 and sell it today you would earn a total of 104.00 from holding Global Small Cap or generate 5.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aqr Large Cap vs. Global Small Cap
Performance |
| Timeline |
| Aqr Large Cap |
| Global Small Cap |
Aqr Large and Global Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aqr Large and Global Small
The main advantage of trading using opposite Aqr Large and Global Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aqr Large position performs unexpectedly, Global Small 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 Global Small will offset losses from the drop in Global Small's long position.| Aqr Large vs. Growth Fund Of | Aqr Large vs. HUMANA INC | Aqr Large vs. Aquagold International | Aqr Large vs. Barloworld Ltd ADR |
| Global Small vs. Invesco Gold Special | Global Small vs. Gabelli Gold Fund | Global Small vs. Oppenheimer Gold Special | Global Small vs. Fidelity Advisor Gold |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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