Correlation Between Aqr Equity and Payden Floating
Can any of the company-specific risk be diversified away by investing in both Aqr Equity and Payden Floating 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 Payden Floating 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 Payden Floating Rate, you can compare the effects of market volatilities on Aqr Equity and Payden Floating 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 Payden Floating. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aqr Equity and Payden Floating.
Diversification Opportunities for Aqr Equity and Payden Floating
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between AQR and Payden is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Aqr Equity Market and Payden Floating Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Payden Floating Rate 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 Payden Floating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Payden Floating Rate has no effect on the direction of Aqr Equity i.e., Aqr Equity and Payden Floating go up and down completely randomly.
Pair Corralation between Aqr Equity and Payden Floating
Assuming the 90 days horizon Aqr Equity Market is expected to generate 5.1 times more return on investment than Payden Floating. However, Aqr Equity is 5.1 times more volatile than Payden Floating Rate. It trades about 0.18 of its potential returns per unit of risk. Payden Floating Rate is currently generating about 0.44 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 Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aqr Equity Market vs. Payden Floating Rate
Performance |
| Timeline |
| Aqr Equity Market |
| Payden Floating Rate |
Aqr Equity and Payden Floating Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aqr Equity and Payden Floating
The main advantage of trading using opposite Aqr Equity and Payden Floating positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aqr Equity position performs unexpectedly, Payden Floating 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 Payden Floating will offset losses from the drop in Payden Floating'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 |
| Payden Floating vs. Shelton Emerging Markets | Payden Floating vs. Doubleline Emerging Markets | Payden Floating vs. Pace International Emerging | Payden Floating vs. Aqr Equity Market |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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