Correlation Between Aqr Long and Federated Mdt
Can any of the company-specific risk be diversified away by investing in both Aqr Long and Federated Mdt 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 Long and Federated Mdt into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aqr Long Short Equity and Federated Mdt All, you can compare the effects of market volatilities on Aqr Long and Federated Mdt 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 Long with a short position of Federated Mdt. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aqr Long and Federated Mdt.
Diversification Opportunities for Aqr Long and Federated Mdt
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Aqr and Federated is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Aqr Long Short Equity and Federated Mdt All in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Mdt All and Aqr Long 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 Long Short Equity are associated (or correlated) with Federated Mdt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Mdt All has no effect on the direction of Aqr Long i.e., Aqr Long and Federated Mdt go up and down completely randomly.
Pair Corralation between Aqr Long and Federated Mdt
Assuming the 90 days horizon Aqr Long is expected to generate 1.08 times less return on investment than Federated Mdt. But when comparing it to its historical volatility, Aqr Long Short Equity is 1.63 times less risky than Federated Mdt. It trades about 0.18 of its potential returns per unit of risk. Federated Mdt All is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 3,102 in Federated Mdt All on September 4, 2024 and sell it today you would earn a total of 1,943 from holding Federated Mdt All or generate 62.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
Aqr Long Short Equity vs. Federated Mdt All
Performance |
| Timeline |
| Aqr Long Short |
| Federated Mdt All |
Aqr Long and Federated Mdt Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aqr Long and Federated Mdt
The main advantage of trading using opposite Aqr Long and Federated Mdt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aqr Long position performs unexpectedly, Federated Mdt 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 Federated Mdt will offset losses from the drop in Federated Mdt's long position.| Aqr Long vs. Salient Mlp Energy | Aqr Long vs. Gmo Resources | Aqr Long vs. Firsthand Alternative Energy | Aqr Long vs. Franklin Natural Resources |
| Federated Mdt vs. Nationwide Global Equity | Federated Mdt vs. Multimedia Portfolio Multimedia | Federated Mdt vs. The Fixed Income | Federated Mdt vs. Balanced Fund Retail |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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