Correlation Between Aqr Large and Multi Manager
Can any of the company-specific risk be diversified away by investing in both Aqr Large and Multi Manager 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 Aqr Large and Multi Manager into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aqr Large Cap and Multi Manager Directional Alternative, you can compare the effects of market volatilities on Aqr Large and Multi Manager 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 Aqr Large with a short position of Multi Manager. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aqr Large and Multi Manager.
Diversification Opportunities for Aqr Large and Multi Manager
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between AQR and MULTI is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Aqr Large Cap and Multi Manager Directional Alte in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multi Manager Direct and Aqr Large 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 Aqr Large Cap are associated (or correlated) with Multi Manager. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multi Manager Direct has no effect on the direction of Aqr Large i.e., Aqr Large and Multi Manager go up and down completely randomly.
Pair Corralation between Aqr Large and Multi Manager
Assuming the 90 days horizon Aqr Large Cap is expected to generate 3.03 times more return on investment than Multi Manager. However, Aqr Large is 3.03 times more volatile than Multi Manager Directional Alternative. It trades about 0.1 of its potential returns per unit of risk. Multi Manager Directional Alternative is currently generating about 0.21 per unit of risk. If you would invest 1,487 in Aqr Large Cap on August 25, 2024 and sell it today you would earn a total of 654.00 from holding Aqr Large Cap or generate 43.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.63% |
| Values | Daily Returns |
Aqr Large Cap vs. Multi Manager Directional Alte
Performance |
| Timeline |
| Aqr Large Cap |
| Multi Manager Direct |
Aqr Large and Multi Manager Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aqr Large and Multi Manager
The main advantage of trading using opposite Aqr Large and Multi Manager positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aqr Large position performs unexpectedly, Multi Manager 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 Multi Manager will offset losses from the drop in Multi Manager's long position.| Aqr Large vs. Aqr Large Cap | Aqr Large vs. Aqr Large Cap | Aqr Large vs. Aqr International Defensive | Aqr Large vs. Aqr International Defensive |
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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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