Correlation Between Mid Cap and Aqr Small
Can any of the company-specific risk be diversified away by investing in both Mid Cap and Aqr 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 Mid Cap and Aqr Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mid Cap 15x Strategy and Aqr Small Cap, you can compare the effects of market volatilities on Mid Cap and Aqr 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 Mid Cap with a short position of Aqr Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mid Cap and Aqr Small.
Diversification Opportunities for Mid Cap and Aqr Small
Almost no diversification
The 3 months correlation between Mid and Aqr is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Mid Cap 15x Strategy and Aqr Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqr Small Cap and Mid Cap 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 Mid Cap 15x Strategy are associated (or correlated) with Aqr Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aqr Small Cap has no effect on the direction of Mid Cap i.e., Mid Cap and Aqr Small go up and down completely randomly.
Pair Corralation between Mid Cap and Aqr Small
Assuming the 90 days horizon Mid Cap 15x Strategy is expected to generate 0.97 times more return on investment than Aqr Small. However, Mid Cap 15x Strategy is 1.03 times less risky than Aqr Small. It trades about 0.1 of its potential returns per unit of risk. Aqr Small Cap is currently generating about 0.08 per unit of risk. If you would invest 10,059 in Mid Cap 15x Strategy on September 14, 2024 and sell it today you would earn a total of 4,227 from holding Mid Cap 15x Strategy or generate 42.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mid Cap 15x Strategy vs. Aqr Small Cap
Performance |
| Timeline |
| Mid Cap 15x |
| Aqr Small Cap |
Mid Cap and Aqr Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mid Cap and Aqr Small
The main advantage of trading using opposite Mid Cap and Aqr Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mid Cap position performs unexpectedly, Aqr 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 Aqr Small will offset losses from the drop in Aqr Small's long position.| Mid Cap vs. Baillie Gifford Health | Mid Cap vs. Lord Abbett Health | Mid Cap vs. Allianzgi Health Sciences | Mid Cap vs. Vanguard Health Care |
| Aqr Small vs. Eagle Mlp Strategy | Aqr Small vs. Origin Emerging Markets | Aqr Small vs. Pnc Emerging Markets | Aqr Small vs. Mid Cap 15x Strategy |
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 CEOs Directory module to screen CEOs from public companies around the world.
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