Correlation Between Absolute Convertible and Aqr Diversified
Can any of the company-specific risk be diversified away by investing in both Absolute Convertible and Aqr Diversified 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 Absolute Convertible and Aqr Diversified into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Absolute Convertible Arbitrage and Aqr Diversified Arbitrage, you can compare the effects of market volatilities on Absolute Convertible and Aqr Diversified 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 Absolute Convertible with a short position of Aqr Diversified. Check out your portfolio center. Please also check ongoing floating volatility patterns of Absolute Convertible and Aqr Diversified.
Diversification Opportunities for Absolute Convertible and Aqr Diversified
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Absolute and Aqr is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Absolute Convertible Arbitrage and Aqr Diversified Arbitrage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqr Diversified Arbitrage and Absolute Convertible 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 Absolute Convertible Arbitrage are associated (or correlated) with Aqr Diversified. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aqr Diversified Arbitrage has no effect on the direction of Absolute Convertible i.e., Absolute Convertible and Aqr Diversified go up and down completely randomly.
Pair Corralation between Absolute Convertible and Aqr Diversified
Assuming the 90 days horizon Absolute Convertible Arbitrage is expected to generate 0.28 times more return on investment than Aqr Diversified. However, Absolute Convertible Arbitrage is 3.58 times less risky than Aqr Diversified. It trades about 0.58 of its potential returns per unit of risk. Aqr Diversified Arbitrage is currently generating about -0.22 per unit of risk. If you would invest 1,143 in Absolute Convertible Arbitrage on September 2, 2024 and sell it today you would earn a total of 7.00 from holding Absolute Convertible Arbitrage or generate 0.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Absolute Convertible Arbitrage vs. Aqr Diversified Arbitrage
Performance |
| Timeline |
| Absolute Convertible |
| Aqr Diversified Arbitrage |
Absolute Convertible and Aqr Diversified Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Absolute Convertible and Aqr Diversified
The main advantage of trading using opposite Absolute Convertible and Aqr Diversified positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Absolute Convertible position performs unexpectedly, Aqr Diversified 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 Diversified will offset losses from the drop in Aqr Diversified's long position.| Absolute Convertible vs. Angel Oak Multi Strategy | Absolute Convertible vs. Transamerica Emerging Markets | Absolute Convertible vs. Black Oak Emerging | Absolute Convertible vs. Barings 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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