Correlation Between Aqr Diversified and Salient Select
Can any of the company-specific risk be diversified away by investing in both Aqr Diversified and Salient Select 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 Salient Select 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 Salient Select Income, you can compare the effects of market volatilities on Aqr Diversified and Salient Select 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 Salient Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aqr Diversified and Salient Select.
Diversification Opportunities for Aqr Diversified and Salient Select
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Aqr and Salient is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Aqr Diversified Arbitrage and Salient Select Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Salient Select Income 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 Salient Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Salient Select Income has no effect on the direction of Aqr Diversified i.e., Aqr Diversified and Salient Select go up and down completely randomly.
Pair Corralation between Aqr Diversified and Salient Select
Assuming the 90 days horizon Aqr Diversified is expected to generate 3.13 times less return on investment than Salient Select. But when comparing it to its historical volatility, Aqr Diversified Arbitrage is 2.42 times less risky than Salient Select. It trades about 0.06 of its potential returns per unit of risk. Salient Select Income is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,579 in Salient Select Income on September 4, 2024 and sell it today you would earn a total of 382.00 from holding Salient Select Income or generate 24.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Aqr Diversified Arbitrage vs. Salient Select Income
Performance |
| Timeline |
| Aqr Diversified Arbitrage |
| Salient Select Income |
Aqr Diversified and Salient Select Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aqr Diversified and Salient Select
The main advantage of trading using opposite Aqr Diversified and Salient Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aqr Diversified position performs unexpectedly, Salient Select 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 Salient Select will offset losses from the drop in Salient Select's long position.| Aqr Diversified vs. Calamos Market Neutral | Aqr Diversified vs. Mondrian Emerging Markets | Aqr Diversified vs. Morgan Stanley Emerging | Aqr Diversified vs. Oklahoma College Savings |
| Salient Select vs. Salient Tactical Plus | Salient Select vs. Salient Tactical Plus | Salient Select vs. Salient Tactical Plus | Salient Select vs. Salient Tactical Plus |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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