Correlation Between Aqr Small and Ab Small
Can any of the company-specific risk be diversified away by investing in both Aqr Small and Ab Small 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 Ab Small 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 Ab Small Cap, you can compare the effects of market volatilities on Aqr Small and Ab Small 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 Ab Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aqr Small and Ab Small.
Diversification Opportunities for Aqr Small and Ab Small
Almost no diversification
The 3 months correlation between Aqr and QUAIX is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Aqr Small Cap and Ab Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Small Cap 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 Ab Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Small Cap has no effect on the direction of Aqr Small i.e., Aqr Small and Ab Small go up and down completely randomly.
Pair Corralation between Aqr Small and Ab Small
Assuming the 90 days horizon Aqr Small Cap is expected to generate 1.13 times more return on investment than Ab Small. However, Aqr Small is 1.13 times more volatile than Ab Small Cap. It trades about 0.07 of its potential returns per unit of risk. Ab Small Cap is currently generating about 0.07 per unit of risk. If you would invest 1,439 in Aqr Small Cap on August 27, 2024 and sell it today you would earn a total of 637.00 from holding Aqr Small Cap or generate 44.27% 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. Ab Small Cap
Performance |
| Timeline |
| Aqr Small Cap |
| Ab Small Cap |
Aqr Small and Ab Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aqr Small and Ab Small
The main advantage of trading using opposite Aqr Small and Ab Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aqr Small position performs unexpectedly, Ab Small 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 Ab Small will offset losses from the drop in Ab Small'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 |
| Ab Small vs. Ancorathelen Small Mid Cap | Ab Small vs. Kinetics Small Cap | Ab Small vs. Tax Managed Mid Small | Ab Small vs. Ab Small Cap |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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