Correlation Between Americafirst Large and Aqr Equity

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Can any of the company-specific risk be diversified away by investing in both Americafirst Large 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 Americafirst Large and Aqr Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Americafirst Large Cap and Aqr Equity Market, you can compare the effects of market volatilities on Americafirst Large 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 Americafirst Large with a short position of Aqr Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Americafirst Large and Aqr Equity.

Diversification Opportunities for Americafirst Large and Aqr Equity

0.78
  Correlation Coefficient

Poor diversification

The 3 months correlation between Americafirst and AQR is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Americafirst Large Cap 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 Americafirst Large 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 Americafirst Large Cap 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 Americafirst Large i.e., Americafirst Large and Aqr Equity go up and down completely randomly.

Pair Corralation between Americafirst Large and Aqr Equity

Assuming the 90 days horizon Americafirst Large Cap is expected to generate 2.92 times more return on investment than Aqr Equity. However, Americafirst Large is 2.92 times more volatile than Aqr Equity Market. It trades about 0.34 of its potential returns per unit of risk. Aqr Equity Market is currently generating about 0.57 per unit of risk. If you would invest  1,361  in Americafirst Large Cap on August 28, 2024 and sell it today you would earn a total of  109.00  from holding Americafirst Large Cap or generate 8.01% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Americafirst Large Cap  vs.  Aqr Equity Market

 Performance 
       Timeline  
Americafirst Large Cap 

Risk-Adjusted Performance

14 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Americafirst Large Cap are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Americafirst Large may actually be approaching a critical reversion point that can send shares even higher in December 2024.
Aqr Equity Market 

Risk-Adjusted Performance

17 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Aqr Equity Market are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Aqr Equity is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Americafirst Large and Aqr Equity Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Americafirst Large and Aqr Equity

The main advantage of trading using opposite Americafirst Large and Aqr Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Americafirst Large 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.
The idea behind Americafirst Large Cap and Aqr Equity Market pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.

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