Correlation Between Commonwealth Global and Aqr Global
Can any of the company-specific risk be diversified away by investing in both Commonwealth Global 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 Commonwealth Global and Aqr Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Commonwealth Global Fund and Aqr Global Macro, you can compare the effects of market volatilities on Commonwealth Global 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 Commonwealth Global with a short position of Aqr Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commonwealth Global and Aqr Global.
Diversification Opportunities for Commonwealth Global and Aqr Global
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Commonwealth and Aqr is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Commonwealth Global Fund and Aqr Global Macro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqr Global Macro and Commonwealth Global 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 Commonwealth Global Fund 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 Macro has no effect on the direction of Commonwealth Global i.e., Commonwealth Global and Aqr Global go up and down completely randomly.
Pair Corralation between Commonwealth Global and Aqr Global
Assuming the 90 days horizon Commonwealth Global Fund is expected to under-perform the Aqr Global. In addition to that, Commonwealth Global is 1.61 times more volatile than Aqr Global Macro. It trades about -0.12 of its total potential returns per unit of risk. Aqr Global Macro is currently generating about 0.16 per unit of volatility. If you would invest 924.00 in Aqr Global Macro on October 30, 2024 and sell it today you would earn a total of 29.00 from holding Aqr Global Macro or generate 3.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Commonwealth Global Fund vs. Aqr Global Macro
Performance |
| Timeline |
| Commonwealth Global |
| Aqr Global Macro |
Commonwealth Global and Aqr Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commonwealth Global and Aqr Global
The main advantage of trading using opposite Commonwealth Global and Aqr Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commonwealth Global 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.The idea behind Commonwealth Global Fund and Aqr Global Macro pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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