Correlation Between Microsoft and Aqr Managed
Can any of the company-specific risk be diversified away by investing in both Microsoft and Aqr Managed 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 Microsoft and Aqr Managed into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Aqr Managed Futures, you can compare the effects of market volatilities on Microsoft and Aqr Managed 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 Microsoft with a short position of Aqr Managed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Aqr Managed.
Diversification Opportunities for Microsoft and Aqr Managed
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Microsoft and Aqr is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Aqr Managed Futures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqr Managed Futures and Microsoft 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 Microsoft are associated (or correlated) with Aqr Managed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aqr Managed Futures has no effect on the direction of Microsoft i.e., Microsoft and Aqr Managed go up and down completely randomly.
Pair Corralation between Microsoft and Aqr Managed
Given the investment horizon of 90 days Microsoft is expected to under-perform the Aqr Managed. In addition to that, Microsoft is 1.88 times more volatile than Aqr Managed Futures. It trades about -0.04 of its total potential returns per unit of risk. Aqr Managed Futures is currently generating about 0.08 per unit of volatility. If you would invest 810.00 in Aqr Managed Futures on August 30, 2024 and sell it today you would earn a total of 12.00 from holding Aqr Managed Futures or generate 1.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Microsoft vs. Aqr Managed Futures
Performance |
| Timeline |
| Microsoft |
| Aqr Managed Futures |
Microsoft and Aqr Managed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Aqr Managed
The main advantage of trading using opposite Microsoft and Aqr Managed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Aqr Managed 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 Managed will offset losses from the drop in Aqr Managed's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Aqr Managed vs. Aqr Large Cap | Aqr Managed vs. Aqr International Defensive | Aqr Managed vs. Aqr International Defensive | Aqr Managed vs. Aqr International Defensive |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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