Correlation Between Vanguard Extended and Aqr Long
Can any of the company-specific risk be diversified away by investing in both Vanguard Extended and Aqr Long 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 Vanguard Extended and Aqr Long into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Extended Market and Aqr Long Short Equity, you can compare the effects of market volatilities on Vanguard Extended and Aqr Long 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 Vanguard Extended with a short position of Aqr Long. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Extended and Aqr Long.
Diversification Opportunities for Vanguard Extended and Aqr Long
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and Aqr is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Extended Market and Aqr Long Short Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqr Long Short and Vanguard Extended 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 Vanguard Extended Market are associated (or correlated) with Aqr Long. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aqr Long Short has no effect on the direction of Vanguard Extended i.e., Vanguard Extended and Aqr Long go up and down completely randomly.
Pair Corralation between Vanguard Extended and Aqr Long
Assuming the 90 days horizon Vanguard Extended Market is expected to generate 2.29 times more return on investment than Aqr Long. However, Vanguard Extended is 2.29 times more volatile than Aqr Long Short Equity. It trades about 0.17 of its potential returns per unit of risk. Aqr Long Short Equity is currently generating about 0.23 per unit of risk. If you would invest 34,786 in Vanguard Extended Market on September 13, 2024 and sell it today you would earn a total of 2,982 from holding Vanguard Extended Market or generate 8.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 97.67% |
| Values | Daily Returns |
Vanguard Extended Market vs. Aqr Long Short Equity
Performance |
| Timeline |
| Vanguard Extended Market |
| Aqr Long Short |
Vanguard Extended and Aqr Long Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Extended and Aqr Long
The main advantage of trading using opposite Vanguard Extended and Aqr Long positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Extended position performs unexpectedly, Aqr Long 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 Long will offset losses from the drop in Aqr Long's long position.| Vanguard Extended vs. Vanguard Materials Index | Vanguard Extended vs. Vanguard Limited Term Tax Exempt | Vanguard Extended vs. Vanguard Limited Term Tax Exempt | Vanguard Extended vs. Vanguard Global Minimum |
| Aqr Long vs. Needham Aggressive Growth | Aqr Long vs. Alliancebernstein Global High | Aqr Long vs. Artisan High Income | Aqr Long vs. Pace High Yield |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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