Correlation Between Health Biotchnology and Aqr Equity
Can any of the company-specific risk be diversified away by investing in both Health Biotchnology and Aqr Equity 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 Health Biotchnology and Aqr Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Health Biotchnology Portfolio and Aqr Equity Market, you can compare the effects of market volatilities on Health Biotchnology and Aqr Equity 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 Health Biotchnology with a short position of Aqr Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Health Biotchnology and Aqr Equity.
Diversification Opportunities for Health Biotchnology and Aqr Equity
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Health and Aqr is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Health Biotchnology Portfolio and Aqr Equity Market in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqr Equity Market and Health Biotchnology 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 Health Biotchnology Portfolio are associated (or correlated) with Aqr Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aqr Equity Market has no effect on the direction of Health Biotchnology i.e., Health Biotchnology and Aqr Equity go up and down completely randomly.
Pair Corralation between Health Biotchnology and Aqr Equity
Assuming the 90 days horizon Health Biotchnology Portfolio is expected to under-perform the Aqr Equity. In addition to that, Health Biotchnology is 1.79 times more volatile than Aqr Equity Market. It trades about -0.11 of its total potential returns per unit of risk. Aqr Equity Market is currently generating about 0.2 per unit of volatility. If you would invest 970.00 in Aqr Equity Market on September 12, 2024 and sell it today you would earn a total of 52.00 from holding Aqr Equity Market or generate 5.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.44% |
| Values | Daily Returns |
Health Biotchnology Portfolio vs. Aqr Equity Market
Performance |
| Timeline |
| Health Biotchnology |
| Aqr Equity Market |
Health Biotchnology and Aqr Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Health Biotchnology and Aqr Equity
The main advantage of trading using opposite Health Biotchnology and Aqr Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Health Biotchnology position performs unexpectedly, Aqr Equity 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 Equity will offset losses from the drop in Aqr Equity's long position.| Health Biotchnology vs. Alpine Ultra Short | Health Biotchnology vs. Aqr Long Short Equity | Health Biotchnology vs. Boston Partners Longshort | Health Biotchnology vs. Quantitative Longshort Equity |
| Aqr Equity vs. Vanguard Global Minimum | Aqr Equity vs. Vanguard Strategic Small Cap | Aqr Equity vs. Aquagold International | Aqr Equity vs. Morningstar Unconstrained Allocation |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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