Correlation Between Rational Defensive and Aqr Style
Can any of the company-specific risk be diversified away by investing in both Rational Defensive and Aqr Style 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 Rational Defensive and Aqr Style into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rational Defensive Growth and Aqr Style Premia, you can compare the effects of market volatilities on Rational Defensive and Aqr Style 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 Rational Defensive with a short position of Aqr Style. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rational Defensive and Aqr Style.
Diversification Opportunities for Rational Defensive and Aqr Style
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Rational and Aqr is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Rational Defensive Growth and Aqr Style Premia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqr Style Premia and Rational Defensive 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 Rational Defensive Growth are associated (or correlated) with Aqr Style. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aqr Style Premia has no effect on the direction of Rational Defensive i.e., Rational Defensive and Aqr Style go up and down completely randomly.
Pair Corralation between Rational Defensive and Aqr Style
Assuming the 90 days horizon Rational Defensive Growth is expected to generate 0.51 times more return on investment than Aqr Style. However, Rational Defensive Growth is 1.97 times less risky than Aqr Style. It trades about 0.13 of its potential returns per unit of risk. Aqr Style Premia is currently generating about 0.03 per unit of risk. If you would invest 2,975 in Rational Defensive Growth on September 14, 2024 and sell it today you would earn a total of 1,203 from holding Rational Defensive Growth or generate 40.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rational Defensive Growth vs. Aqr Style Premia
Performance |
| Timeline |
| Rational Defensive Growth |
| Aqr Style Premia |
Rational Defensive and Aqr Style Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rational Defensive and Aqr Style
The main advantage of trading using opposite Rational Defensive and Aqr Style positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rational Defensive position performs unexpectedly, Aqr Style 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 Style will offset losses from the drop in Aqr Style's long position.| Rational Defensive vs. Ab Small Cap | Rational Defensive vs. Scout Small Cap | Rational Defensive vs. Siit Small Mid | Rational Defensive vs. Lebenthal Lisanti Small |
| Aqr Style vs. Artisan Small Cap | Aqr Style vs. Vy Baron Growth | Aqr Style vs. Rational Defensive Growth | Aqr Style vs. Mid Cap Growth |
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 Stocks Directory module to find actively traded stocks across global markets.
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