Correlation Between Smallcap Fund and Aqr Long-short
Can any of the company-specific risk be diversified away by investing in both Smallcap Fund and Aqr Long-short 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 Smallcap Fund and Aqr Long-short into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Smallcap Fund Fka and Aqr Long Short Equity, you can compare the effects of market volatilities on Smallcap Fund and Aqr Long-short 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 Smallcap Fund with a short position of Aqr Long-short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smallcap Fund and Aqr Long-short.
Diversification Opportunities for Smallcap Fund and Aqr Long-short
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Smallcap and Aqr is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Smallcap Fund Fka and Aqr Long Short Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqr Long Short and Smallcap Fund 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 Smallcap Fund Fka are associated (or correlated) with Aqr Long-short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aqr Long Short has no effect on the direction of Smallcap Fund i.e., Smallcap Fund and Aqr Long-short go up and down completely randomly.
Pair Corralation between Smallcap Fund and Aqr Long-short
Assuming the 90 days horizon Smallcap Fund Fka is expected to generate 1.93 times more return on investment than Aqr Long-short. However, Smallcap Fund is 1.93 times more volatile than Aqr Long Short Equity. It trades about 0.31 of its potential returns per unit of risk. Aqr Long Short Equity is currently generating about 0.35 per unit of risk. If you would invest 2,551 in Smallcap Fund Fka on October 28, 2024 and sell it today you would earn a total of 137.00 from holding Smallcap Fund Fka or generate 5.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Smallcap Fund Fka vs. Aqr Long Short Equity
Performance |
| Timeline |
| Smallcap Fund Fka |
| Aqr Long Short |
Smallcap Fund and Aqr Long-short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smallcap Fund and Aqr Long-short
The main advantage of trading using opposite Smallcap Fund and Aqr Long-short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smallcap Fund position performs unexpectedly, Aqr Long-short 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 Long-short will offset losses from the drop in Aqr Long-short's long position.| Smallcap Fund vs. Ab Bond Inflation | Smallcap Fund vs. Tiaa Cref Inflation Linked Bond | Smallcap Fund vs. Credit Suisse Multialternative | Smallcap Fund vs. Abbey Capital Futures |
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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 Stocks Directory module to find actively traded stocks across global markets.
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