Correlation Between Aqr International and Aqr Alternative
Can any of the company-specific risk be diversified away by investing in both Aqr International and Aqr Alternative 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 Alternative 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 Alternative Risk, you can compare the effects of market volatilities on Aqr International and Aqr Alternative 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 Alternative. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aqr International and Aqr Alternative.
Diversification Opportunities for Aqr International and Aqr Alternative
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Aqr and Aqr is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Aqr International Defensive and Aqr Alternative Risk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqr Alternative Risk 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 Alternative. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aqr Alternative Risk has no effect on the direction of Aqr International i.e., Aqr International and Aqr Alternative go up and down completely randomly.
Pair Corralation between Aqr International and Aqr Alternative
Assuming the 90 days horizon Aqr International is expected to generate 1.34 times less return on investment than Aqr Alternative. But when comparing it to its historical volatility, Aqr International Defensive is 1.13 times less risky than Aqr Alternative. It trades about 0.06 of its potential returns per unit of risk. Aqr Alternative Risk is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 909.00 in Aqr Alternative Risk on September 13, 2024 and sell it today you would earn a total of 240.00 from holding Aqr Alternative Risk or generate 26.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aqr International Defensive vs. Aqr Alternative Risk
Performance |
| Timeline |
| Aqr International |
| Aqr Alternative Risk |
Aqr International and Aqr Alternative Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aqr International and Aqr Alternative
The main advantage of trading using opposite Aqr International and Aqr Alternative positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aqr International position performs unexpectedly, Aqr Alternative 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 Alternative will offset losses from the drop in Aqr Alternative's long position.| Aqr International vs. Aqr Large Cap | Aqr International vs. Aqr Large Cap | Aqr International vs. Aqr International Defensive | Aqr International vs. Aqr Long Short Equity |
| Aqr Alternative vs. Barings Emerging Markets | Aqr Alternative vs. Artisan Emerging Markets | Aqr Alternative vs. Pnc Emerging Markets | Aqr Alternative vs. Siit Emerging Markets |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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