Correlation Between Aqr Equity and Aqr Alternative
Can any of the company-specific risk be diversified away by investing in both Aqr Equity and Aqr Alternative 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 Aqr Alternative 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 Aqr Alternative Risk, you can compare the effects of market volatilities on Aqr Equity and Aqr Alternative 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 Aqr Alternative. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aqr Equity and Aqr Alternative.
Diversification Opportunities for Aqr Equity and Aqr Alternative
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between AQR and AQR is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Aqr Equity Market and Aqr Alternative Risk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqr Alternative Risk 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 Aqr Alternative. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aqr Alternative Risk has no effect on the direction of Aqr Equity i.e., Aqr Equity and Aqr Alternative go up and down completely randomly.
Pair Corralation between Aqr Equity and Aqr Alternative
Assuming the 90 days horizon Aqr Equity Market is expected to generate 0.68 times more return on investment than Aqr Alternative. However, Aqr Equity Market is 1.46 times less risky than Aqr Alternative. It trades about 0.16 of its potential returns per unit of risk. Aqr Alternative Risk is currently generating about 0.06 per unit of risk. If you would invest 1,033 in Aqr Equity Market on December 14, 2024 and sell it today you would earn a total of 16.00 from holding Aqr Equity Market or generate 1.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aqr Equity Market vs. Aqr Alternative Risk
Performance |
| Timeline |
| Aqr Equity Market |
| Aqr Alternative Risk |
Aqr Equity and Aqr Alternative Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aqr Equity and Aqr Alternative
The main advantage of trading using opposite Aqr Equity and Aqr Alternative positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aqr Equity position performs unexpectedly, Aqr Alternative 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 Aqr Alternative will offset losses from the drop in Aqr Alternative's long position.| Aqr Equity vs. The Hartford Emerging | ||
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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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