Correlation Between Aqr Small and Vanguard Small
Can any of the company-specific risk be diversified away by investing in both Aqr Small and Vanguard 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 Vanguard 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 Vanguard Small Cap Index, you can compare the effects of market volatilities on Aqr Small and Vanguard 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 Vanguard Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aqr Small and Vanguard Small.
Diversification Opportunities for Aqr Small and Vanguard Small
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Aqr and Vanguard is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Aqr Small Cap and Vanguard Small Cap Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard 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 Vanguard Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Small Cap has no effect on the direction of Aqr Small i.e., Aqr Small and Vanguard Small go up and down completely randomly.
Pair Corralation between Aqr Small and Vanguard Small
Assuming the 90 days horizon Aqr Small Cap is expected to generate 1.35 times more return on investment than Vanguard Small. However, Aqr Small is 1.35 times more volatile than Vanguard Small Cap Index. It trades about 0.06 of its potential returns per unit of risk. Vanguard Small Cap Index is currently generating about 0.07 per unit of risk. If you would invest 1,593 in Aqr Small Cap on September 12, 2024 and sell it today you would earn a total of 460.00 from holding Aqr Small Cap or generate 28.88% 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. Vanguard Small Cap Index
Performance |
| Timeline |
| Aqr Small Cap |
| Vanguard Small Cap |
Aqr Small and Vanguard Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aqr Small and Vanguard Small
The main advantage of trading using opposite Aqr Small and Vanguard Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aqr Small position performs unexpectedly, Vanguard 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 Vanguard Small will offset losses from the drop in Vanguard Small's long position.| Aqr Small vs. Sp Midcap Index | Aqr Small vs. Sp 500 Index | Aqr Small vs. Nasdaq 100 Index Fund | Aqr Small vs. Deutsche Sp 500 |
| Vanguard Small vs. Vanguard Mid Cap Index | Vanguard Small vs. Vanguard 500 Index | Vanguard Small vs. Vanguard Emerging Markets | Vanguard Small vs. Vanguard Reit Index |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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