Correlation Between Aqr Equity and Gotham Neutral
Can any of the company-specific risk be diversified away by investing in both Aqr Equity and Gotham Neutral 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 Gotham Neutral 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 Gotham Neutral Fund, you can compare the effects of market volatilities on Aqr Equity and Gotham Neutral 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 Gotham Neutral. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aqr Equity and Gotham Neutral.
Diversification Opportunities for Aqr Equity and Gotham Neutral
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Aqr and Gotham is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Aqr Equity Market and Gotham Neutral Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gotham 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 Gotham Neutral. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gotham Neutral has no effect on the direction of Aqr Equity i.e., Aqr Equity and Gotham Neutral go up and down completely randomly.
Pair Corralation between Aqr Equity and Gotham Neutral
Assuming the 90 days horizon Aqr Equity Market is expected to generate 1.3 times more return on investment than Gotham Neutral. However, Aqr Equity is 1.3 times more volatile than Gotham Neutral Fund. It trades about 0.21 of its potential returns per unit of risk. Gotham Neutral Fund is currently generating about 0.2 per unit of risk. If you would invest 755.00 in Aqr Equity Market on September 12, 2024 and sell it today you would earn a total of 297.00 from holding Aqr Equity Market or generate 39.34% 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. Gotham Neutral Fund
Performance |
| Timeline |
| Aqr Equity Market |
| Gotham Neutral |
Aqr Equity and Gotham Neutral Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aqr Equity and Gotham Neutral
The main advantage of trading using opposite Aqr Equity and Gotham Neutral positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aqr Equity position performs unexpectedly, Gotham Neutral 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 Gotham Neutral will offset losses from the drop in Gotham Neutral's long position.| Aqr Equity vs. Jhancock Disciplined Value | Aqr Equity vs. Fisher Large Cap | Aqr Equity vs. T Rowe Price | Aqr Equity vs. Touchstone Large Cap |
| Gotham Neutral vs. Commonwealth Global Fund | Gotham Neutral vs. Qs Growth Fund | Gotham Neutral vs. Multimedia Portfolio Multimedia | Gotham Neutral vs. Auer Growth Fund |
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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