Correlation Between Small Capitalization and Aqr Equity
Can any of the company-specific risk be diversified away by investing in both Small Capitalization 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 Small Capitalization and Aqr Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Small Capitalization Portfolio and Aqr Equity Market, you can compare the effects of market volatilities on Small Capitalization 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 Small Capitalization with a short position of Aqr Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small Capitalization and Aqr Equity.
Diversification Opportunities for Small Capitalization and Aqr Equity
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Small and Aqr is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Small Capitalization 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 Small Capitalization 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 Small Capitalization 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 Small Capitalization i.e., Small Capitalization and Aqr Equity go up and down completely randomly.
Pair Corralation between Small Capitalization and Aqr Equity
Assuming the 90 days horizon Small Capitalization Portfolio is expected to generate 3.12 times more return on investment than Aqr Equity. However, Small Capitalization is 3.12 times more volatile than Aqr Equity Market. It trades about 0.19 of its potential returns per unit of risk. Aqr Equity Market is currently generating about 0.38 per unit of risk. If you would invest 572.00 in Small Capitalization Portfolio on November 10, 2024 and sell it today you would earn a total of 24.00 from holding Small Capitalization Portfolio or generate 4.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Small Capitalization Portfolio vs. Aqr Equity Market
Performance |
| Timeline |
| Small Capitalization |
| Aqr Equity Market |
Small Capitalization and Aqr Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Small Capitalization and Aqr Equity
The main advantage of trading using opposite Small Capitalization and Aqr Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Small Capitalization 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.| Small Capitalization vs. Alphacentric Lifesci Healthcare | Small Capitalization vs. Health Care Fund | Small Capitalization vs. Hartford Healthcare Hls | Small Capitalization vs. Health Care Ultrasector |
| Aqr Equity vs. Ab Small Cap | Aqr Equity vs. Vanguard Small Cap Value | Aqr Equity vs. Lord Abbett Small | Aqr Equity vs. Valic Company I |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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