Correlation Between Aqr Diversified and American Funds
Can any of the company-specific risk be diversified away by investing in both Aqr Diversified 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 Diversified 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 Diversified Arbitrage and American Funds American, you can compare the effects of market volatilities on Aqr Diversified 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 Diversified with a short position of American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aqr Diversified and American Funds.
Diversification Opportunities for Aqr Diversified and American Funds
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Aqr and American is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Aqr Diversified Arbitrage and American Funds American in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds American and Aqr Diversified 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 Diversified Arbitrage 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 American has no effect on the direction of Aqr Diversified i.e., Aqr Diversified and American Funds go up and down completely randomly.
Pair Corralation between Aqr Diversified and American Funds
Assuming the 90 days horizon Aqr Diversified is expected to generate 3.64 times less return on investment than American Funds. But when comparing it to its historical volatility, Aqr Diversified Arbitrage is 2.54 times less risky than American Funds. It trades about 0.06 of its potential returns per unit of risk. American Funds American is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 4,559 in American Funds American on September 12, 2024 and sell it today you would earn a total of 1,398 from holding American Funds American or generate 30.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aqr Diversified Arbitrage vs. American Funds American
Performance |
| Timeline |
| Aqr Diversified Arbitrage |
| American Funds American |
Aqr Diversified and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aqr Diversified and American Funds
The main advantage of trading using opposite Aqr Diversified and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aqr Diversified 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 Diversified vs. Royce Opportunity Fund | Aqr Diversified vs. Vanguard Small Cap Value | Aqr Diversified vs. Queens Road Small | Aqr Diversified vs. Heartland Value Plus |
| American Funds vs. Vanguard Value Index | American Funds vs. Dodge Cox Stock | American Funds vs. American Mutual Fund | American Funds vs. American Funds American |
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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