Correlation Between Aqr Small and Small Midcap
Can any of the company-specific risk be diversified away by investing in both Aqr Small and Small Midcap 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 Small Midcap 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 Small Midcap Dividend Income, you can compare the effects of market volatilities on Aqr Small and Small Midcap 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 Small Midcap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aqr Small and Small Midcap.
Diversification Opportunities for Aqr Small and Small Midcap
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Aqr and Small is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Aqr Small Cap and Small Midcap Dividend Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Midcap Dividend 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 Small Midcap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Midcap Dividend has no effect on the direction of Aqr Small i.e., Aqr Small and Small Midcap go up and down completely randomly.
Pair Corralation between Aqr Small and Small Midcap
Assuming the 90 days horizon Aqr Small Cap is expected to generate 1.33 times more return on investment than Small Midcap. However, Aqr Small is 1.33 times more volatile than Small Midcap Dividend Income. It trades about 0.06 of its potential returns per unit of risk. Small Midcap Dividend Income is currently generating about 0.05 per unit of risk. If you would invest 1,438 in Aqr Small Cap on August 27, 2024 and sell it today you would earn a total of 638.00 from holding Aqr Small Cap or generate 44.37% 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. Small Midcap Dividend Income
Performance |
| Timeline |
| Aqr Small Cap |
| Small Midcap Dividend |
Aqr Small and Small Midcap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aqr Small and Small Midcap
The main advantage of trading using opposite Aqr Small and Small Midcap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aqr Small position performs unexpectedly, Small Midcap 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 Small Midcap will offset losses from the drop in Small Midcap's long position.| Aqr Small vs. Aqr Large Cap | Aqr Small vs. Aqr Large Cap | Aqr Small vs. Aqr International Defensive | Aqr Small vs. Aqr International Defensive |
| Small Midcap vs. Bbh Intermediate Municipal | Small Midcap vs. California Bond Fund | Small Midcap vs. Nuveen Minnesota Municipal | Small Midcap vs. Alliancebernstein National Municipal |
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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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