Correlation Between Large Cap and Aqr Large
Can any of the company-specific risk be diversified away by investing in both Large Cap 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 Large Cap and Aqr Large into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Large Cap Equity and Aqr Large Cap, you can compare the effects of market volatilities on Large Cap 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 Large Cap with a short position of Aqr Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Large Cap and Aqr Large.
Diversification Opportunities for Large Cap and Aqr Large
Very poor diversification
The 3 months correlation between Large and Aqr is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Large Cap Equity 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 Large Cap 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 Large Cap Equity 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 Large Cap i.e., Large Cap and Aqr Large go up and down completely randomly.
Pair Corralation between Large Cap and Aqr Large
Assuming the 90 days horizon Large Cap is expected to generate 1.39 times less return on investment than Aqr Large. But when comparing it to its historical volatility, Large Cap Equity is 1.6 times less risky than Aqr Large. It trades about 0.05 of its potential returns per unit of risk. Aqr Large Cap is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,065 in Aqr Large Cap on September 2, 2024 and sell it today you would earn a total of 592.00 from holding Aqr Large Cap or generate 28.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Large Cap Equity vs. Aqr Large Cap
Performance |
| Timeline |
| Large Cap Equity |
| Aqr Large Cap |
Large Cap and Aqr Large Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Large Cap and Aqr Large
The main advantage of trading using opposite Large Cap and Aqr Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Large Cap 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.| Large Cap vs. Fidelity Select Semiconductors | Large Cap vs. Westwood Largecap Value | Large Cap vs. Russell 2000 2x | Large Cap vs. Federated Hermes Conservative |
| Aqr Large vs. Aqr Large Cap | Aqr Large vs. Doubleline Shiller Enhanced | Aqr Large vs. Edgewood Growth Fund | Aqr Large vs. Aqr Long Short Equity |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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