Correlation Between NYSE Composite and Aqr International
Can any of the company-specific risk be diversified away by investing in both NYSE Composite 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 NYSE Composite and Aqr International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Aqr International Momentum, you can compare the effects of market volatilities on NYSE Composite 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 NYSE Composite with a short position of Aqr International. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Aqr International.
Diversification Opportunities for NYSE Composite and Aqr International
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between NYSE and AQR is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Aqr International Momentum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqr International and NYSE Composite 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 NYSE Composite 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 NYSE Composite i.e., NYSE Composite and Aqr International go up and down completely randomly.
Pair Corralation between NYSE Composite and Aqr International
Assuming the 90 days trading horizon NYSE Composite is expected to generate 1.02 times less return on investment than Aqr International. But when comparing it to its historical volatility, NYSE Composite is 1.2 times less risky than Aqr International. It trades about 0.08 of its potential returns per unit of risk. Aqr International Momentum is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,362 in Aqr International Momentum on September 2, 2024 and sell it today you would earn a total of 421.00 from holding Aqr International Momentum or generate 30.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Aqr International Momentum
Performance |
| Timeline |
NYSE Composite and Aqr International Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Aqr International Momentum
Pair trading matchups for Aqr International
Pair Trading with NYSE Composite and Aqr International
The main advantage of trading using opposite NYSE Composite and Aqr International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite 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.| NYSE Composite vs. Simon Property Group | NYSE Composite vs. Merit Medical Systems | NYSE Composite vs. Catalent | NYSE Composite vs. Titan Machinery |
| Aqr International vs. Aqr Large Cap | Aqr International vs. Aqr Large Cap | Aqr International vs. Aqr International Defensive | Aqr International 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 CEOs Directory module to screen CEOs from public companies around the world.
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