Correlation Between Russell 2000 and Aqr Large
Can any of the company-specific risk be diversified away by investing in both Russell 2000 and Aqr Large 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 Russell 2000 and Aqr Large into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Russell 2000 2x and Aqr Large Cap, you can compare the effects of market volatilities on Russell 2000 and Aqr Large 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 Russell 2000 with a short position of Aqr Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Russell 2000 and Aqr Large.
Diversification Opportunities for Russell 2000 and Aqr Large
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Russell and Aqr is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Russell 2000 2x and Aqr Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqr Large Cap and Russell 2000 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 Russell 2000 2x are associated (or correlated) with Aqr Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aqr Large Cap has no effect on the direction of Russell 2000 i.e., Russell 2000 and Aqr Large go up and down completely randomly.
Pair Corralation between Russell 2000 and Aqr Large
Assuming the 90 days horizon Russell 2000 2x is expected to generate 3.21 times more return on investment than Aqr Large. However, Russell 2000 is 3.21 times more volatile than Aqr Large Cap. It trades about 0.2 of its potential returns per unit of risk. Aqr Large Cap is currently generating about 0.23 per unit of risk. If you would invest 17,132 in Russell 2000 2x on August 28, 2024 and sell it today you would earn a total of 2,396 from holding Russell 2000 2x or generate 13.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Russell 2000 2x vs. Aqr Large Cap
Performance |
| Timeline |
| Russell 2000 2x |
| Aqr Large Cap |
Russell 2000 and Aqr Large Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Russell 2000 and Aqr Large
The main advantage of trading using opposite Russell 2000 and Aqr Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Russell 2000 position performs unexpectedly, Aqr Large 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 Large will offset losses from the drop in Aqr Large's long position.| Russell 2000 vs. California Bond Fund | Russell 2000 vs. T Rowe Price | Russell 2000 vs. Multisector Bond Sma | Russell 2000 vs. Versatile Bond Portfolio |
| Aqr Large vs. Hartford Healthcare Hls | Aqr Large vs. Prudential Health Sciences | Aqr Large vs. Baron Health Care | Aqr Large vs. The Gabelli Healthcare |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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