Correlation Between Oberweis Emerging and Aqr Large
Can any of the company-specific risk be diversified away by investing in both Oberweis Emerging 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 Oberweis Emerging and Aqr Large into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oberweis Emerging Growth and Aqr Large Cap, you can compare the effects of market volatilities on Oberweis Emerging 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 Oberweis Emerging with a short position of Aqr Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oberweis Emerging and Aqr Large.
Diversification Opportunities for Oberweis Emerging and Aqr Large
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Oberweis and Aqr is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Oberweis Emerging Growth 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 Oberweis Emerging 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 Oberweis Emerging Growth 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 Oberweis Emerging i.e., Oberweis Emerging and Aqr Large go up and down completely randomly.
Pair Corralation between Oberweis Emerging and Aqr Large
Assuming the 90 days horizon Oberweis Emerging Growth is expected to generate 1.35 times more return on investment than Aqr Large. However, Oberweis Emerging is 1.35 times more volatile than Aqr Large Cap. It trades about 0.2 of its potential returns per unit of risk. Aqr Large Cap is currently generating about 0.21 per unit of risk. If you would invest 2,988 in Oberweis Emerging Growth on October 28, 2024 and sell it today you would earn a total of 127.00 from holding Oberweis Emerging Growth or generate 4.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Oberweis Emerging Growth vs. Aqr Large Cap
Performance |
| Timeline |
| Oberweis Emerging Growth |
| Aqr Large Cap |
Oberweis Emerging and Aqr Large Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oberweis Emerging and Aqr Large
The main advantage of trading using opposite Oberweis Emerging and Aqr Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oberweis Emerging 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.The idea behind Oberweis Emerging Growth and Aqr Large Cap pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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