Correlation Between NYSE Composite and Aqr Small
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Aqr Small 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 Small 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 Small Cap, you can compare the effects of market volatilities on NYSE Composite and Aqr Small 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 Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Aqr Small.
Diversification Opportunities for NYSE Composite and Aqr Small
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between NYSE and Aqr is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Aqr Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqr Small Cap 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 Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aqr Small Cap has no effect on the direction of NYSE Composite i.e., NYSE Composite and Aqr Small go up and down completely randomly.
Pair Corralation between NYSE Composite and Aqr Small
Assuming the 90 days trading horizon NYSE Composite is expected to generate 1.62 times less return on investment than Aqr Small. But when comparing it to its historical volatility, NYSE Composite is 2.12 times less risky than Aqr Small. It trades about 0.11 of its potential returns per unit of risk. Aqr Small Cap is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,376 in Aqr Small Cap on August 31, 2024 and sell it today you would earn a total of 715.00 from holding Aqr Small Cap or generate 51.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Aqr Small Cap
Performance |
| Timeline |
NYSE Composite and Aqr Small Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Aqr Small Cap
Pair trading matchups for Aqr Small
Pair Trading with NYSE Composite and Aqr Small
The main advantage of trading using opposite NYSE Composite and Aqr Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Aqr Small 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 Small will offset losses from the drop in Aqr Small's long position.| NYSE Composite vs. Nextplat Corp | NYSE Composite vs. Qualys Inc | NYSE Composite vs. Cadence Design Systems | NYSE Composite vs. Asure Software |
| Aqr Small vs. Vanguard Small Cap Index | Aqr Small vs. Vanguard Small Cap Index | Aqr Small vs. T Rowe Price | Aqr Small vs. HUMANA INC |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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