Correlation Between Aqr Small and Old Westbury
Can any of the company-specific risk be diversified away by investing in both Aqr Small and Old Westbury 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 Small and Old Westbury into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aqr Small Cap and Old Westbury Small, you can compare the effects of market volatilities on Aqr Small and Old Westbury 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 Small with a short position of Old Westbury. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aqr Small and Old Westbury.
Diversification Opportunities for Aqr Small and Old Westbury
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Aqr and Old is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Aqr Small Cap and Old Westbury Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Old Westbury Small and Aqr Small 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 Small Cap are associated (or correlated) with Old Westbury. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Old Westbury Small has no effect on the direction of Aqr Small i.e., Aqr Small and Old Westbury go up and down completely randomly.
Pair Corralation between Aqr Small and Old Westbury
Assuming the 90 days horizon Aqr Small Cap is expected to generate 1.73 times more return on investment than Old Westbury. However, Aqr Small is 1.73 times more volatile than Old Westbury Small. It trades about 0.06 of its potential returns per unit of risk. Old Westbury Small is currently generating about 0.06 per unit of risk. If you would invest 1,401 in Aqr Small Cap on September 14, 2024 and sell it today you would earn a total of 678.00 from holding Aqr Small Cap or generate 48.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aqr Small Cap vs. Old Westbury Small
Performance |
| Timeline |
| Aqr Small Cap |
| Old Westbury Small |
Aqr Small and Old Westbury Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aqr Small and Old Westbury
The main advantage of trading using opposite Aqr Small and Old Westbury positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aqr Small position performs unexpectedly, Old Westbury 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 Old Westbury will offset losses from the drop in Old Westbury's long position.| Aqr Small vs. Deutsche Global Inflation | Aqr Small vs. Ab Bond Inflation | Aqr Small vs. Loomis Sayles Inflation | Aqr Small vs. Guggenheim Managed Futures |
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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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