Correlation Between Aqr Large and Kinetics Small
Can any of the company-specific risk be diversified away by investing in both Aqr Large and Kinetics Small 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 Kinetics Small 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 Kinetics Small Cap, you can compare the effects of market volatilities on Aqr Large and Kinetics Small 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 Kinetics Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aqr Large and Kinetics Small.
Diversification Opportunities for Aqr Large and Kinetics Small
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between AQR and Kinetics is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Aqr Large Cap and Kinetics Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinetics Small Cap 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 Kinetics Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinetics Small Cap has no effect on the direction of Aqr Large i.e., Aqr Large and Kinetics Small go up and down completely randomly.
Pair Corralation between Aqr Large and Kinetics Small
Assuming the 90 days horizon Aqr Large is expected to generate 1.32 times less return on investment than Kinetics Small. But when comparing it to its historical volatility, Aqr Large Cap is 1.18 times less risky than Kinetics Small. It trades about 0.07 of its potential returns per unit of risk. Kinetics Small Cap is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 13,751 in Kinetics Small Cap on August 26, 2024 and sell it today you would earn a total of 10,236 from holding Kinetics Small Cap or generate 74.44% 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. Kinetics Small Cap
Performance |
| Timeline |
| Aqr Large Cap |
| Kinetics Small Cap |
Aqr Large and Kinetics Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aqr Large and Kinetics Small
The main advantage of trading using opposite Aqr Large and Kinetics Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aqr Large position performs unexpectedly, Kinetics Small 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 Kinetics Small will offset losses from the drop in Kinetics Small'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 |
| Kinetics Small vs. Aqr Large Cap | Kinetics Small vs. Qs Large Cap | Kinetics Small vs. Massmutual Select T | Kinetics Small vs. T Rowe Price |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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