Correlation Between Aqr Large and American Funds
Can any of the company-specific risk be diversified away by investing in both Aqr Large and American Funds 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 American Funds 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 American Funds Fundamental, you can compare the effects of market volatilities on Aqr Large and American Funds 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 American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aqr Large and American Funds.
Diversification Opportunities for Aqr Large and American Funds
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Aqr and American is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Aqr Large Cap and American Funds Fundamental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds Funda 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 American Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds Funda has no effect on the direction of Aqr Large i.e., Aqr Large and American Funds go up and down completely randomly.
Pair Corralation between Aqr Large and American Funds
Assuming the 90 days horizon Aqr Large Cap is expected to generate 1.61 times more return on investment than American Funds. However, Aqr Large is 1.61 times more volatile than American Funds Fundamental. It trades about 0.08 of its potential returns per unit of risk. American Funds Fundamental is currently generating about 0.12 per unit of risk. If you would invest 1,490 in Aqr Large Cap on August 31, 2024 and sell it today you would earn a total of 679.00 from holding Aqr Large Cap or generate 45.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aqr Large Cap vs. American Funds Fundamental
Performance |
| Timeline |
| Aqr Large Cap |
| American Funds Funda |
Aqr Large and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aqr Large and American Funds
The main advantage of trading using opposite Aqr Large and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aqr Large position performs unexpectedly, American Funds 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 American Funds will offset losses from the drop in American Funds' long position.| Aqr Large vs. Allianzgi Health Sciences | Aqr Large vs. Lord Abbett Health | Aqr Large vs. Blackrock Health Sciences | Aqr Large vs. Health Biotchnology Portfolio |
| American Funds vs. Legg Mason Partners | American Funds vs. California Bond Fund | American Funds vs. Maryland Tax Free Bond | American Funds vs. Multisector Bond Sma |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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