Correlation Between Aqr Large and Midcap Growth
Can any of the company-specific risk be diversified away by investing in both Aqr Large and Midcap Growth 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 Midcap Growth 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 The Midcap Growth, you can compare the effects of market volatilities on Aqr Large and Midcap Growth 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 Midcap Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aqr Large and Midcap Growth.
Diversification Opportunities for Aqr Large and Midcap Growth
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Aqr and Midcap is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Aqr Large Cap and The Midcap Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Midcap Growth 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 Midcap Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Midcap Growth has no effect on the direction of Aqr Large i.e., Aqr Large and Midcap Growth go up and down completely randomly.
Pair Corralation between Aqr Large and Midcap Growth
Assuming the 90 days horizon Aqr Large Cap is expected to generate 0.33 times more return on investment than Midcap Growth. However, Aqr Large Cap is 3.01 times less risky than Midcap Growth. It trades about -0.07 of its potential returns per unit of risk. The Midcap Growth is currently generating about -0.21 per unit of risk. If you would invest 2,566 in Aqr Large Cap on September 12, 2024 and sell it today you would lose (29.00) from holding Aqr Large Cap or give up 1.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aqr Large Cap vs. The Midcap Growth
Performance |
| Timeline |
| Aqr Large Cap |
| Midcap Growth |
Aqr Large and Midcap Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aqr Large and Midcap Growth
The main advantage of trading using opposite Aqr Large and Midcap Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aqr Large position performs unexpectedly, Midcap Growth 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 Midcap Growth will offset losses from the drop in Midcap Growth's long position.| Aqr Large vs. The Gabelli Healthcare | Aqr Large vs. Eventide Healthcare Life | Aqr Large vs. Tekla Healthcare Opportunities | Aqr Large vs. Vanguard Health Care |
| Midcap Growth vs. Money Market Obligations | Midcap Growth vs. Matson Money Equity | Midcap Growth vs. Aig Government Money | Midcap Growth vs. Edward Jones Money |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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