Correlation Between Plumb Equity and Aqr Managed
Can any of the company-specific risk be diversified away by investing in both Plumb Equity 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 Plumb Equity and Aqr Managed into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Plumb Equity and Aqr Managed Futures, you can compare the effects of market volatilities on Plumb Equity 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 Plumb Equity with a short position of Aqr Managed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Plumb Equity and Aqr Managed.
Diversification Opportunities for Plumb Equity and Aqr Managed
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Plumb and Aqr is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Plumb Equity 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 Plumb Equity 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 Plumb Equity 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 Plumb Equity i.e., Plumb Equity and Aqr Managed go up and down completely randomly.
Pair Corralation between Plumb Equity and Aqr Managed
Assuming the 90 days horizon Plumb Equity is expected to generate 5.43 times less return on investment than Aqr Managed. But when comparing it to its historical volatility, Plumb Equity is 1.06 times less risky than Aqr Managed. It trades about 0.03 of its potential returns per unit of risk. Aqr Managed Futures is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 812.00 in Aqr Managed Futures on September 13, 2024 and sell it today you would earn a total of 26.00 from holding Aqr Managed Futures or generate 3.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Plumb Equity vs. Aqr Managed Futures
Performance |
| Timeline |
| Plumb Equity |
| Aqr Managed Futures |
Plumb Equity and Aqr Managed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Plumb Equity and Aqr Managed
The main advantage of trading using opposite Plumb Equity and Aqr Managed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Plumb Equity 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.| Plumb Equity vs. Aqr Managed Futures | Plumb Equity vs. Ab Bond Inflation | Plumb Equity vs. Guidepath Managed Futures | Plumb Equity vs. Fidelity Sai Inflationfocused |
| Aqr Managed vs. Ab Discovery Value | Aqr Managed vs. Heartland Value Plus | Aqr Managed vs. Ab Small Cap | Aqr Managed vs. Fpa Queens Road |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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