Correlation Between Western Asset and Aqr Risk-balanced
Can any of the company-specific risk be diversified away by investing in both Western Asset and Aqr Risk-balanced 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 Western Asset and Aqr Risk-balanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset High and Aqr Risk Balanced Modities, you can compare the effects of market volatilities on Western Asset and Aqr Risk-balanced 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 Western Asset with a short position of Aqr Risk-balanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Aqr Risk-balanced.
Diversification Opportunities for Western Asset and Aqr Risk-balanced
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Western and AQR is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset High and Aqr Risk Balanced Modities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqr Risk Balanced and Western Asset 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 Western Asset High are associated (or correlated) with Aqr Risk-balanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aqr Risk Balanced has no effect on the direction of Western Asset i.e., Western Asset and Aqr Risk-balanced go up and down completely randomly.
Pair Corralation between Western Asset and Aqr Risk-balanced
Assuming the 90 days horizon Western Asset is expected to generate 2.48 times less return on investment than Aqr Risk-balanced. But when comparing it to its historical volatility, Western Asset High is 4.86 times less risky than Aqr Risk-balanced. It trades about 0.2 of its potential returns per unit of risk. Aqr Risk Balanced Modities is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 820.00 in Aqr Risk Balanced Modities on September 2, 2024 and sell it today you would earn a total of 43.00 from holding Aqr Risk Balanced Modities or generate 5.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset High vs. Aqr Risk Balanced Modities
Performance |
| Timeline |
| Western Asset High |
| Aqr Risk Balanced |
Western Asset and Aqr Risk-balanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Aqr Risk-balanced
The main advantage of trading using opposite Western Asset and Aqr Risk-balanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Aqr Risk-balanced 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 Risk-balanced will offset losses from the drop in Aqr Risk-balanced's long position.| Western Asset vs. Clearbridge Aggressive Growth | Western Asset vs. Clearbridge Small Cap | Western Asset vs. Qs International Equity | Western Asset vs. Clearbridge Appreciation Fund |
| Aqr Risk-balanced vs. Aqr Large Cap | Aqr Risk-balanced vs. Aqr Large Cap | Aqr Risk-balanced vs. Aqr International Defensive | Aqr Risk-balanced vs. Aqr International Defensive |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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