Correlation Between Aqr Equity and Gmo Global
Can any of the company-specific risk be diversified away by investing in both Aqr Equity and Gmo Global 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 Equity and Gmo Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aqr Equity Market and Gmo Global Equity, you can compare the effects of market volatilities on Aqr Equity and Gmo Global 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 Equity with a short position of Gmo Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aqr Equity and Gmo Global.
Diversification Opportunities for Aqr Equity and Gmo Global
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between AQR and Gmo is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Aqr Equity Market and Gmo Global Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gmo Global Equity and Aqr Equity 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 Equity Market are associated (or correlated) with Gmo Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gmo Global Equity has no effect on the direction of Aqr Equity i.e., Aqr Equity and Gmo Global go up and down completely randomly.
Pair Corralation between Aqr Equity and Gmo Global
Assuming the 90 days horizon Aqr Equity Market is expected to generate 0.62 times more return on investment than Gmo Global. However, Aqr Equity Market is 1.6 times less risky than Gmo Global. It trades about 0.18 of its potential returns per unit of risk. Gmo Global Equity is currently generating about 0.08 per unit of risk. If you would invest 686.00 in Aqr Equity Market on August 25, 2024 and sell it today you would earn a total of 357.00 from holding Aqr Equity Market or generate 52.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aqr Equity Market vs. Gmo Global Equity
Performance |
| Timeline |
| Aqr Equity Market |
| Gmo Global Equity |
Aqr Equity and Gmo Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aqr Equity and Gmo Global
The main advantage of trading using opposite Aqr Equity and Gmo Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aqr Equity position performs unexpectedly, Gmo Global 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 Gmo Global will offset losses from the drop in Gmo Global's long position.| Aqr Equity vs. Aqr Large Cap | Aqr Equity vs. Aqr Large Cap | Aqr Equity vs. Aqr International Defensive | Aqr Equity vs. Aqr International Defensive |
| Gmo Global vs. Extended Market Index | Gmo Global vs. Aqr Equity Market | Gmo Global vs. Transamerica Emerging Markets | Gmo Global vs. Origin Emerging Markets |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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