Correlation Between Stone Ridge and Aqr Diversified
Can any of the company-specific risk be diversified away by investing in both Stone Ridge and Aqr Diversified 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 Stone Ridge and Aqr Diversified into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stone Ridge Diversified and Aqr Diversified Arbitrage, you can compare the effects of market volatilities on Stone Ridge and Aqr Diversified 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 Stone Ridge with a short position of Aqr Diversified. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stone Ridge and Aqr Diversified.
Diversification Opportunities for Stone Ridge and Aqr Diversified
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Stone and Aqr is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Stone Ridge Diversified and Aqr Diversified Arbitrage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqr Diversified Arbitrage and Stone Ridge 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 Stone Ridge Diversified are associated (or correlated) with Aqr Diversified. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aqr Diversified Arbitrage has no effect on the direction of Stone Ridge i.e., Stone Ridge and Aqr Diversified go up and down completely randomly.
Pair Corralation between Stone Ridge and Aqr Diversified
Assuming the 90 days horizon Stone Ridge Diversified is expected to under-perform the Aqr Diversified. In addition to that, Stone Ridge is 1.85 times more volatile than Aqr Diversified Arbitrage. It trades about -0.12 of its total potential returns per unit of risk. Aqr Diversified Arbitrage is currently generating about 0.6 per unit of volatility. If you would invest 1,220 in Aqr Diversified Arbitrage on December 3, 2024 and sell it today you would earn a total of 16.00 from holding Aqr Diversified Arbitrage or generate 1.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Stone Ridge Diversified vs. Aqr Diversified Arbitrage
Performance |
| Timeline |
| Stone Ridge Diversified |
| Aqr Diversified Arbitrage |
Stone Ridge and Aqr Diversified Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stone Ridge and Aqr Diversified
The main advantage of trading using opposite Stone Ridge and Aqr Diversified positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stone Ridge position performs unexpectedly, Aqr Diversified 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 Diversified will offset losses from the drop in Aqr Diversified's long position.| Stone Ridge vs. Ab High Income | Stone Ridge vs. Metropolitan West High | Stone Ridge vs. Ab High Income | Stone Ridge vs. Access Flex High |
| Aqr Diversified vs. Columbia Real Estate | Aqr Diversified vs. Deutsche Real Estate | Aqr Diversified vs. Real Estate Securities | Aqr Diversified vs. Nexpoint Real Estate |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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