Correlation Between Aqr International and Aqr Global
Can any of the company-specific risk be diversified away by investing in both Aqr International and Aqr Global 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 International and Aqr Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aqr International Defensive and Aqr Global Equity, you can compare the effects of market volatilities on Aqr International and Aqr Global 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 International with a short position of Aqr Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aqr International and Aqr Global.
Diversification Opportunities for Aqr International and Aqr Global
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Aqr and Aqr is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Aqr International Defensive and Aqr Global Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqr Global Equity and Aqr International 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 International Defensive are associated (or correlated) with Aqr Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aqr Global Equity has no effect on the direction of Aqr International i.e., Aqr International and Aqr Global go up and down completely randomly.
Pair Corralation between Aqr International and Aqr Global
Assuming the 90 days horizon Aqr International Defensive is expected to under-perform the Aqr Global. But the mutual fund apears to be less risky and, when comparing its historical volatility, Aqr International Defensive is 1.03 times less risky than Aqr Global. The mutual fund trades about -0.1 of its potential returns per unit of risk. The Aqr Global Equity is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 1,164 in Aqr Global Equity on August 31, 2024 and sell it today you would earn a total of 38.00 from holding Aqr Global Equity or generate 3.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aqr International Defensive vs. Aqr Global Equity
Performance |
| Timeline |
| Aqr International |
| Aqr Global Equity |
Aqr International and Aqr Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aqr International and Aqr Global
The main advantage of trading using opposite Aqr International and Aqr Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aqr International position performs unexpectedly, Aqr Global 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 Global will offset losses from the drop in Aqr Global's long position.| Aqr International vs. John Hancock Financial | Aqr International vs. Prudential Jennison Financial | Aqr International vs. Fidelity Advisor Financial | Aqr International vs. Davis Financial Fund |
| Aqr Global vs. Kinetics Global Fund | Aqr Global vs. T Rowe Price | Aqr Global vs. Wisdomtree Siegel Global | Aqr Global vs. Ms Global Fixed |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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