Correlation Between American Funds and Aqr Managed
Can any of the company-specific risk be diversified away by investing in both American Funds and Aqr Managed 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 American Funds and Aqr Managed into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds 2035 and Aqr Managed Futures, you can compare the effects of market volatilities on American Funds and Aqr Managed 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 American Funds with a short position of Aqr Managed. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Aqr Managed.
Diversification Opportunities for American Funds and Aqr Managed
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between American and Aqr is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding American Funds 2035 and Aqr Managed Futures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqr Managed Futures and American Funds 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 American Funds 2035 are associated (or correlated) with Aqr Managed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aqr Managed Futures has no effect on the direction of American Funds i.e., American Funds and Aqr Managed go up and down completely randomly.
Pair Corralation between American Funds and Aqr Managed
Assuming the 90 days horizon American Funds 2035 is expected to generate 0.57 times more return on investment than Aqr Managed. However, American Funds 2035 is 1.76 times less risky than Aqr Managed. It trades about 0.13 of its potential returns per unit of risk. Aqr Managed Futures is currently generating about 0.03 per unit of risk. If you would invest 1,755 in American Funds 2035 on September 3, 2024 and sell it today you would earn a total of 278.00 from holding American Funds 2035 or generate 15.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Funds 2035 vs. Aqr Managed Futures
Performance |
| Timeline |
| American Funds 2035 |
| Aqr Managed Futures |
American Funds and Aqr Managed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Aqr Managed
The main advantage of trading using opposite American Funds and Aqr Managed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Aqr Managed 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 Managed will offset losses from the drop in Aqr Managed's long position.| American Funds vs. Nasdaq 100 Fund Class | American Funds vs. Volumetric Fund Volumetric | American Funds vs. Qs Growth Fund | American Funds vs. Commonwealth Global Fund |
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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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