Correlation Between Capital Income and Aqr Small
Can any of the company-specific risk be diversified away by investing in both Capital Income and Aqr Small 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 Capital Income and Aqr Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capital Income Builder and Aqr Small Cap, you can compare the effects of market volatilities on Capital Income and Aqr Small 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 Capital Income with a short position of Aqr Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital Income and Aqr Small.
Diversification Opportunities for Capital Income and Aqr Small
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Capital and Aqr is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Capital Income Builder and Aqr Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqr Small Cap and Capital Income 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 Capital Income Builder are associated (or correlated) with Aqr Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aqr Small Cap has no effect on the direction of Capital Income i.e., Capital Income and Aqr Small go up and down completely randomly.
Pair Corralation between Capital Income and Aqr Small
Assuming the 90 days horizon Capital Income Builder is expected to generate 0.44 times more return on investment than Aqr Small. However, Capital Income Builder is 2.25 times less risky than Aqr Small. It trades about 0.23 of its potential returns per unit of risk. Aqr Small Cap is currently generating about 0.03 per unit of risk. If you would invest 6,924 in Capital Income Builder on November 4, 2024 and sell it today you would earn a total of 175.00 from holding Capital Income Builder or generate 2.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capital Income Builder vs. Aqr Small Cap
Performance |
| Timeline |
| Capital Income Builder |
| Aqr Small Cap |
Capital Income and Aqr Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital Income and Aqr Small
The main advantage of trading using opposite Capital Income and Aqr Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital Income position performs unexpectedly, Aqr Small 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 Small will offset losses from the drop in Aqr Small's long position.| Capital Income vs. Dws Global Macro | Capital Income vs. Rbb Fund | Capital Income vs. Kinetics Global Fund | Capital Income vs. Ms Global Fixed |
| Aqr Small vs. Simt High Yield | Aqr Small vs. Multi Manager High Yield | Aqr Small vs. City National Rochdale | Aqr Small vs. Six Circles Credit |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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