Correlation Between Kinetics Small and Aqr Large
Can any of the company-specific risk be diversified away by investing in both Kinetics Small 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 Kinetics Small and Aqr Large into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kinetics Small Cap and Aqr Large Cap, you can compare the effects of market volatilities on Kinetics Small 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 Kinetics Small with a short position of Aqr Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinetics Small and Aqr Large.
Diversification Opportunities for Kinetics Small and Aqr Large
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Kinetics and Aqr is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Small Cap 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 Kinetics Small 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 Kinetics Small Cap 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 Kinetics Small i.e., Kinetics Small and Aqr Large go up and down completely randomly.
Pair Corralation between Kinetics Small and Aqr Large
Assuming the 90 days horizon Kinetics Small Cap is expected to generate 1.36 times more return on investment than Aqr Large. However, Kinetics Small is 1.36 times more volatile than Aqr Large Cap. It trades about 0.15 of its potential returns per unit of risk. Aqr Large Cap is currently generating about 0.08 per unit of risk. If you would invest 10,102 in Kinetics Small Cap on September 2, 2024 and sell it today you would earn a total of 12,696 from holding Kinetics Small Cap or generate 125.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kinetics Small Cap vs. Aqr Large Cap
Performance |
| Timeline |
| Kinetics Small Cap |
| Aqr Large Cap |
Kinetics Small and Aqr Large Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kinetics Small and Aqr Large
The main advantage of trading using opposite Kinetics Small and Aqr Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinetics Small 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.| Kinetics Small vs. Kinetics Paradigm Fund | Kinetics Small vs. Kinetics Market Opportunities | Kinetics Small vs. Pear Tree Polaris | Kinetics Small vs. Amg Managers Loomis |
| Aqr Large vs. Aqr Long Short Equity | Aqr Large vs. Old Westbury Short Term | Aqr Large vs. Federated Ultrashort Bond | Aqr Large vs. Sterling Capital Short |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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