Correlation Between NYSE Composite and Aqr Risk
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Aqr Risk 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 Risk 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 Risk Parity, you can compare the effects of market volatilities on NYSE Composite and Aqr Risk 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 Risk. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Aqr Risk.
Diversification Opportunities for NYSE Composite and Aqr Risk
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NYSE and Aqr is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Aqr Risk Parity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqr Risk Parity 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 Risk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aqr Risk Parity has no effect on the direction of NYSE Composite i.e., NYSE Composite and Aqr Risk go up and down completely randomly.
Pair Corralation between NYSE Composite and Aqr Risk
Assuming the 90 days trading horizon NYSE Composite is expected to generate 1.19 times more return on investment than Aqr Risk. However, NYSE Composite is 1.19 times more volatile than Aqr Risk Parity. It trades about 0.15 of its potential returns per unit of risk. Aqr Risk Parity is currently generating about 0.06 per unit of risk. If you would invest 1,906,443 in NYSE Composite on August 28, 2024 and sell it today you would earn a total of 115,593 from holding NYSE Composite or generate 6.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Aqr Risk Parity
Performance |
| Timeline |
NYSE Composite and Aqr Risk Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Aqr Risk Parity
Pair trading matchups for Aqr Risk
Pair Trading with NYSE Composite and Aqr Risk
The main advantage of trading using opposite NYSE Composite and Aqr Risk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Aqr Risk 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 Risk will offset losses from the drop in Aqr Risk's long position.| NYSE Composite vs. Hooker Furniture | NYSE Composite vs. Hudson Pacific Properties | NYSE Composite vs. Canlan Ice Sports | NYSE Composite vs. Boston Properties |
| Aqr Risk vs. Aig Government Money | Aqr Risk vs. John Hancock Government | Aqr Risk vs. Blackrock Government Bond | Aqr Risk vs. Fidelity Series Government |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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