Correlation Between Precious Metals and Aqr Small
Can any of the company-specific risk be diversified away by investing in both Precious Metals 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 Precious Metals and Aqr Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Precious Metals Fund and Aqr Small Cap, you can compare the effects of market volatilities on Precious Metals 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 Precious Metals with a short position of Aqr Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Precious Metals and Aqr Small.
Diversification Opportunities for Precious Metals and Aqr Small
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between PRECIOUS and Aqr is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Precious Metals Fund 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 Precious Metals 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 Precious Metals Fund 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 Precious Metals i.e., Precious Metals and Aqr Small go up and down completely randomly.
Pair Corralation between Precious Metals and Aqr Small
Assuming the 90 days horizon Precious Metals Fund is expected to generate 1.59 times more return on investment than Aqr Small. However, Precious Metals is 1.59 times more volatile than Aqr Small Cap. It trades about 0.3 of its potential returns per unit of risk. Aqr Small Cap is currently generating about 0.13 per unit of risk. If you would invest 3,758 in Precious Metals Fund on November 1, 2024 and sell it today you would earn a total of 358.00 from holding Precious Metals Fund or generate 9.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Precious Metals Fund vs. Aqr Small Cap
Performance |
| Timeline |
| Precious Metals |
| Aqr Small Cap |
Precious Metals and Aqr Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Precious Metals and Aqr Small
The main advantage of trading using opposite Precious Metals and Aqr Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Precious Metals 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.| Precious Metals vs. Energy Fund Investor | Precious Metals vs. Energy Services Fund | Precious Metals vs. Basic Materials Fund | Precious Metals vs. Health Care Fund |
| Aqr Small vs. Sprott Gold Equity | Aqr Small vs. Precious Metals Fund | Aqr Small vs. Franklin Gold Precious | Aqr Small vs. Vy Goldman Sachs |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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