Correlation Between Health Care and Aqr International
Can any of the company-specific risk be diversified away by investing in both Health Care and Aqr International 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 Health Care and Aqr International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Health Care Ultrasector and Aqr International Defensive, you can compare the effects of market volatilities on Health Care and Aqr International 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 Health Care with a short position of Aqr International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Health Care and Aqr International.
Diversification Opportunities for Health Care and Aqr International
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Health and Aqr is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Health Care Ultrasector and Aqr International Defensive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqr International and Health Care 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 Health Care Ultrasector are associated (or correlated) with Aqr International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aqr International has no effect on the direction of Health Care i.e., Health Care and Aqr International go up and down completely randomly.
Pair Corralation between Health Care and Aqr International
Assuming the 90 days horizon Health Care Ultrasector is expected to generate 2.12 times more return on investment than Aqr International. However, Health Care is 2.12 times more volatile than Aqr International Defensive. It trades about 0.22 of its potential returns per unit of risk. Aqr International Defensive is currently generating about 0.03 per unit of risk. If you would invest 9,615 in Health Care Ultrasector on October 20, 2024 and sell it today you would earn a total of 446.00 from holding Health Care Ultrasector or generate 4.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Health Care Ultrasector vs. Aqr International Defensive
Performance |
| Timeline |
| Health Care Ultrasector |
| Aqr International |
Health Care and Aqr International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Health Care and Aqr International
The main advantage of trading using opposite Health Care and Aqr International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Health Care position performs unexpectedly, Aqr International 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 International will offset losses from the drop in Aqr International's long position.| Health Care vs. Alliancebernstein Global Highome | Health Care vs. Tax Managed Large Cap | Health Care vs. Touchstone Large Cap | Health Care vs. Gmo Global Equity |
| Aqr International vs. Health Care Ultrasector | Aqr International vs. Deutsche Health And | Aqr International vs. Baillie Gifford Health | Aqr International vs. Live Oak Health |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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