Correlation Between American Funds and Aqr Large
Can any of the company-specific risk be diversified away by investing in both American Funds and Aqr Large 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 American Funds and Aqr Large into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds Capital and Aqr Large Cap, you can compare the effects of market volatilities on American Funds and Aqr Large 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 American Funds with a short position of Aqr Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Aqr Large.
Diversification Opportunities for American Funds and Aqr Large
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between American and Aqr is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding American Funds Capital and Aqr Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqr Large Cap and American Funds 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 American Funds Capital are associated (or correlated) with Aqr Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aqr Large Cap has no effect on the direction of American Funds i.e., American Funds and Aqr Large go up and down completely randomly.
Pair Corralation between American Funds and Aqr Large
Assuming the 90 days horizon American Funds is expected to generate 5.86 times less return on investment than Aqr Large. But when comparing it to its historical volatility, American Funds Capital is 2.29 times less risky than Aqr Large. It trades about 0.15 of its potential returns per unit of risk. Aqr Large Cap is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest 2,395 in Aqr Large Cap on September 3, 2024 and sell it today you would earn a total of 186.00 from holding Aqr Large Cap or generate 7.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Funds Capital vs. Aqr Large Cap
Performance |
| Timeline |
| American Funds Capital |
| Aqr Large Cap |
American Funds and Aqr Large Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Aqr Large
The main advantage of trading using opposite American Funds and Aqr Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Aqr Large 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 Large will offset losses from the drop in Aqr Large's long position.| American Funds vs. Aqr Large Cap | American Funds vs. Qs Large Cap | American Funds vs. Qs Large Cap | American Funds vs. Avantis Large Cap |
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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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