Correlation Between Guidemark Large and Aqr Long-short
Can any of the company-specific risk be diversified away by investing in both Guidemark Large and Aqr Long-short 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 Guidemark Large and Aqr Long-short into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Guidemark Large Cap and Aqr Long Short Equity, you can compare the effects of market volatilities on Guidemark Large and Aqr Long-short 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 Guidemark Large with a short position of Aqr Long-short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guidemark Large and Aqr Long-short.
Diversification Opportunities for Guidemark Large and Aqr Long-short
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Guidemark and Aqr is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Guidemark Large Cap and Aqr Long Short Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqr Long Short and Guidemark Large 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 Guidemark Large Cap are associated (or correlated) with Aqr Long-short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aqr Long Short has no effect on the direction of Guidemark Large i.e., Guidemark Large and Aqr Long-short go up and down completely randomly.
Pair Corralation between Guidemark Large and Aqr Long-short
Assuming the 90 days horizon Guidemark Large Cap is expected to under-perform the Aqr Long-short. In addition to that, Guidemark Large is 1.78 times more volatile than Aqr Long Short Equity. It trades about -0.03 of its total potential returns per unit of risk. Aqr Long Short Equity is currently generating about -0.05 per unit of volatility. If you would invest 1,729 in Aqr Long Short Equity on December 14, 2024 and sell it today you would lose (13.00) from holding Aqr Long Short Equity or give up 0.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guidemark Large Cap vs. Aqr Long Short Equity
Performance |
| Timeline |
| Guidemark Large Cap |
| Aqr Long Short |
Guidemark Large and Aqr Long-short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guidemark Large and Aqr Long-short
The main advantage of trading using opposite Guidemark Large and Aqr Long-short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guidemark Large position performs unexpectedly, Aqr Long-short 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 Long-short will offset losses from the drop in Aqr Long-short's long position.| Guidemark Large vs. Vanguard Financials Index | ||
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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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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