Correlation Between Capital World and Aqr Global
Can any of the company-specific risk be diversified away by investing in both Capital World 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 Capital World and Aqr Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capital World Growth and Aqr Global Equity, you can compare the effects of market volatilities on Capital World 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 Capital World with a short position of Aqr Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital World and Aqr Global.
Diversification Opportunities for Capital World and Aqr Global
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Capital and Aqr is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Capital World Growth 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 Capital World 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 World Growth 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 Capital World i.e., Capital World and Aqr Global go up and down completely randomly.
Pair Corralation between Capital World and Aqr Global
Assuming the 90 days horizon Capital World Growth is expected to under-perform the Aqr Global. But the mutual fund apears to be less risky and, when comparing its historical volatility, Capital World Growth is 1.04 times less risky than Aqr Global. The mutual fund trades about -0.04 of its potential returns per unit of risk. The Aqr Global Equity is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 1,144 in Aqr Global Equity on August 28, 2024 and sell it today you would earn a total of 38.00 from holding Aqr Global Equity or generate 3.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capital World Growth vs. Aqr Global Equity
Performance |
| Timeline |
| Capital World Growth |
| Aqr Global Equity |
Capital World and Aqr Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital World and Aqr Global
The main advantage of trading using opposite Capital World and Aqr Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital World 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.| Capital World vs. Income Fund Of | Capital World vs. New World Fund | Capital World vs. American Mutual Fund | Capital World vs. American Mutual Fund |
| Aqr Global vs. Aqr Large Cap | Aqr Global vs. Aqr Large Cap | Aqr Global vs. Aqr International Defensive | Aqr Global vs. Aqr International Defensive |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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