Correlation Between Aqr Style and Aqr Tm
Can any of the company-specific risk be diversified away by investing in both Aqr Style and Aqr Tm 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 Style and Aqr Tm into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aqr Style Premia and Aqr Tm Emerging, you can compare the effects of market volatilities on Aqr Style and Aqr Tm 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 Style with a short position of Aqr Tm. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aqr Style and Aqr Tm.
Diversification Opportunities for Aqr Style and Aqr Tm
Excellent diversification
The 3 months correlation between Aqr and Aqr is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Aqr Style Premia and Aqr Tm Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqr Tm Emerging and Aqr Style 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 Style Premia are associated (or correlated) with Aqr Tm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aqr Tm Emerging has no effect on the direction of Aqr Style i.e., Aqr Style and Aqr Tm go up and down completely randomly.
Pair Corralation between Aqr Style and Aqr Tm
Assuming the 90 days horizon Aqr Style Premia is expected to generate 0.54 times more return on investment than Aqr Tm. However, Aqr Style Premia is 1.86 times less risky than Aqr Tm. It trades about 0.22 of its potential returns per unit of risk. Aqr Tm Emerging is currently generating about -0.19 per unit of risk. If you would invest 794.00 in Aqr Style Premia on August 27, 2024 and sell it today you would earn a total of 19.00 from holding Aqr Style Premia or generate 2.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aqr Style Premia vs. Aqr Tm Emerging
Performance |
| Timeline |
| Aqr Style Premia |
| Aqr Tm Emerging |
Aqr Style and Aqr Tm Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aqr Style and Aqr Tm
The main advantage of trading using opposite Aqr Style and Aqr Tm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aqr Style position performs unexpectedly, Aqr Tm 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 Aqr Tm will offset losses from the drop in Aqr Tm's long position.| Aqr Style vs. Aqr Large Cap | Aqr Style vs. Aqr Large Cap | Aqr Style vs. Aqr International Defensive | Aqr Style vs. Aqr International Defensive |
| Aqr Tm vs. Aqr Large Cap | Aqr Tm vs. Aqr Large Cap | Aqr Tm vs. Aqr International Defensive | Aqr Tm vs. Aqr International Defensive |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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