Correlation Between Aqr Equity and Cognios Market
Can any of the company-specific risk be diversified away by investing in both Aqr Equity and Cognios Market 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 Cognios Market 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 Cognios Market Neutral, you can compare the effects of market volatilities on Aqr Equity and Cognios Market 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 Cognios Market. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aqr Equity and Cognios Market.
Diversification Opportunities for Aqr Equity and Cognios Market
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Aqr and Cognios is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Aqr Equity Market and Cognios Market Neutral in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cognios Market Neutral 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 Cognios Market. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cognios Market Neutral has no effect on the direction of Aqr Equity i.e., Aqr Equity and Cognios Market go up and down completely randomly.
Pair Corralation between Aqr Equity and Cognios Market
Assuming the 90 days horizon Aqr Equity Market is expected to generate 0.91 times more return on investment than Cognios Market. However, Aqr Equity Market is 1.1 times less risky than Cognios Market. It trades about 0.17 of its potential returns per unit of risk. Cognios Market Neutral is currently generating about 0.05 per unit of risk. If you would invest 740.00 in Aqr Equity Market on September 1, 2024 and sell it today you would earn a total of 307.00 from holding Aqr Equity Market or generate 41.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aqr Equity Market vs. Cognios Market Neutral
Performance |
| Timeline |
| Aqr Equity Market |
| Cognios Market Neutral |
Aqr Equity and Cognios Market Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aqr Equity and Cognios Market
The main advantage of trading using opposite Aqr Equity and Cognios Market positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aqr Equity position performs unexpectedly, Cognios Market 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 Cognios Market will offset losses from the drop in Cognios Market'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 |
| Cognios Market vs. Aqr Long Short Equity | Cognios Market vs. Aqr Equity Market | Cognios Market vs. Cognios Market Neutral | Cognios Market vs. Aqr Managed Futures |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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