Correlation Between Vanguard Health and Aqr Small
Can any of the company-specific risk be diversified away by investing in both Vanguard Health and Aqr Small 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 Health and Aqr Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Health Care and Aqr Small Cap, you can compare the effects of market volatilities on Vanguard Health and Aqr Small 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 Health with a short position of Aqr Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Health and Aqr Small.
Diversification Opportunities for Vanguard Health and Aqr Small
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Vanguard and Aqr is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Health Care and Aqr Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqr Small Cap and Vanguard 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 Vanguard Health Care are associated (or correlated) with Aqr Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aqr Small Cap has no effect on the direction of Vanguard Health i.e., Vanguard Health and Aqr Small go up and down completely randomly.
Pair Corralation between Vanguard Health and Aqr Small
Assuming the 90 days horizon Vanguard Health Care is expected to under-perform the Aqr Small. But the mutual fund apears to be less risky and, when comparing its historical volatility, Vanguard Health Care is 1.19 times less risky than Aqr Small. The mutual fund trades about -0.1 of its potential returns per unit of risk. The Aqr Small Cap is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 2,495 in Aqr Small Cap on September 13, 2024 and sell it today you would lose (38.00) from holding Aqr Small Cap or give up 1.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Vanguard Health Care vs. Aqr Small Cap
Performance |
| Timeline |
| Vanguard Health Care |
| Aqr Small Cap |
Vanguard Health and Aqr Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Health and Aqr Small
The main advantage of trading using opposite Vanguard Health and Aqr Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Health position performs unexpectedly, Aqr Small 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 Small will offset losses from the drop in Aqr Small's long position.| Vanguard Health vs. Vanguard Energy Fund | Vanguard Health vs. Vanguard Dividend Growth | Vanguard Health vs. Vanguard Wellington Fund | Vanguard Health vs. Vanguard Capital Opportunity |
| Aqr Small vs. Aqr Large Cap | Aqr Small vs. Aqr International Momentum | Aqr Small vs. Aqr Managed Futures | Aqr Small vs. Us Large Cap |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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