Correlation Between Aqr Large and Payden Absolute
Can any of the company-specific risk be diversified away by investing in both Aqr Large and Payden Absolute 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 Payden Absolute 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 Payden Absolute Return, you can compare the effects of market volatilities on Aqr Large and Payden Absolute 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 Payden Absolute. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aqr Large and Payden Absolute.
Diversification Opportunities for Aqr Large and Payden Absolute
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Aqr and Payden is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Aqr Large Cap and Payden Absolute Return in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Payden Absolute Return 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 Payden Absolute. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Payden Absolute Return has no effect on the direction of Aqr Large i.e., Aqr Large and Payden Absolute go up and down completely randomly.
Pair Corralation between Aqr Large and Payden Absolute
Assuming the 90 days horizon Aqr Large Cap is expected to generate 4.8 times more return on investment than Payden Absolute. However, Aqr Large is 4.8 times more volatile than Payden Absolute Return. It trades about 0.38 of its potential returns per unit of risk. Payden Absolute Return is currently generating about -0.13 per unit of risk. If you would invest 2,395 in Aqr Large Cap on September 1, 2024 and sell it today you would earn a total of 186.00 from holding Aqr Large Cap or generate 7.77% 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. Payden Absolute Return
Performance |
| Timeline |
| Aqr Large Cap |
| Payden Absolute Return |
Aqr Large and Payden Absolute Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aqr Large and Payden Absolute
The main advantage of trading using opposite Aqr Large and Payden Absolute positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aqr Large position performs unexpectedly, Payden Absolute 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 Payden Absolute will offset losses from the drop in Payden Absolute's long position.| Aqr Large vs. Aqr Large Cap | Aqr Large vs. Aqr International Defensive | Aqr Large vs. Aqr International Defensive | Aqr Large vs. Aqr Long Short Equity |
| Payden Absolute vs. Jhancock Disciplined Value | Payden Absolute vs. Americafirst Large Cap | Payden Absolute vs. Aqr Large Cap | Payden Absolute vs. Dunham Large Cap |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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