Correlation Between Aqr Small and Foreign Bond
Can any of the company-specific risk be diversified away by investing in both Aqr Small and Foreign Bond 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 Foreign Bond 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 Foreign Bond Fund, you can compare the effects of market volatilities on Aqr Small and Foreign Bond 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 Foreign Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aqr Small and Foreign Bond.
Diversification Opportunities for Aqr Small and Foreign Bond
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Aqr and Foreign is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Aqr Small Cap and Foreign Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Foreign Bond 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 Foreign Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Foreign Bond has no effect on the direction of Aqr Small i.e., Aqr Small and Foreign Bond go up and down completely randomly.
Pair Corralation between Aqr Small and Foreign Bond
Assuming the 90 days horizon Aqr Small is expected to generate 1.27 times less return on investment than Foreign Bond. In addition to that, Aqr Small is 2.44 times more volatile than Foreign Bond Fund. It trades about 0.05 of its total potential returns per unit of risk. Foreign Bond Fund is currently generating about 0.15 per unit of volatility. If you would invest 743.00 in Foreign Bond Fund on September 14, 2024 and sell it today you would earn a total of 9.00 from holding Foreign Bond Fund or generate 1.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aqr Small Cap vs. Foreign Bond Fund
Performance |
| Timeline |
| Aqr Small Cap |
| Foreign Bond |
Aqr Small and Foreign Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aqr Small and Foreign Bond
The main advantage of trading using opposite Aqr Small and Foreign Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aqr Small position performs unexpectedly, Foreign Bond 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 Foreign Bond will offset losses from the drop in Foreign Bond'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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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