Correlation Between Blackrock Health and Aqr International
Can any of the company-specific risk be diversified away by investing in both Blackrock Health and Aqr International 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 Blackrock Health and Aqr International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Blackrock Health Sciences and Aqr International Defensive, you can compare the effects of market volatilities on Blackrock Health and Aqr International 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 Blackrock Health with a short position of Aqr International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackrock Health and Aqr International.
Diversification Opportunities for Blackrock Health and Aqr International
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Blackrock and Aqr is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Health Sciences and Aqr International Defensive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqr International and Blackrock Health 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 Blackrock Health Sciences are associated (or correlated) with Aqr International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aqr International has no effect on the direction of Blackrock Health i.e., Blackrock Health and Aqr International go up and down completely randomly.
Pair Corralation between Blackrock Health and Aqr International
Assuming the 90 days horizon Blackrock Health Sciences is expected to under-perform the Aqr International. In addition to that, Blackrock Health is 1.61 times more volatile than Aqr International Defensive. It trades about -0.19 of its total potential returns per unit of risk. Aqr International Defensive is currently generating about 0.04 per unit of volatility. If you would invest 1,475 in Aqr International Defensive on September 12, 2024 and sell it today you would earn a total of 6.00 from holding Aqr International Defensive or generate 0.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Blackrock Health Sciences vs. Aqr International Defensive
Performance |
| Timeline |
| Blackrock Health Sciences |
| Aqr International |
Blackrock Health and Aqr International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Blackrock Health and Aqr International
The main advantage of trading using opposite Blackrock Health and Aqr International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blackrock Health position performs unexpectedly, Aqr International 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 International will offset losses from the drop in Aqr International's long position.| Blackrock Health vs. Blackrock Health Sciences | Blackrock Health vs. Blackrock Health Sciences | Blackrock Health vs. Blackrock Health Sciences | Blackrock Health vs. Blackrock Health Sciences |
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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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