Correlation Between Western Asset and Aqr Diversified
Can any of the company-specific risk be diversified away by investing in both Western Asset 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 Western Asset and Aqr Diversified into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Diversified and Aqr Diversified Arbitrage, you can compare the effects of market volatilities on Western Asset 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 Western Asset with a short position of Aqr Diversified. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Aqr Diversified.
Diversification Opportunities for Western Asset and Aqr Diversified
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Western and Aqr is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset 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 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 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 Western Asset i.e., Western Asset and Aqr Diversified go up and down completely randomly.
Pair Corralation between Western Asset and Aqr Diversified
Assuming the 90 days horizon Western Asset Diversified is expected to generate 1.41 times more return on investment than Aqr Diversified. However, Western Asset is 1.41 times more volatile than Aqr Diversified Arbitrage. It trades about -0.03 of its potential returns per unit of risk. Aqr Diversified Arbitrage is currently generating about -0.14 per unit of risk. If you would invest 1,540 in Western Asset Diversified on August 27, 2024 and sell it today you would lose (3.00) from holding Western Asset Diversified or give up 0.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Diversified vs. Aqr Diversified Arbitrage
Performance |
| Timeline |
| Western Asset Diversified |
| Aqr Diversified Arbitrage |
Western Asset and Aqr Diversified Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Aqr Diversified
The main advantage of trading using opposite Western Asset and Aqr Diversified positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset 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.| Western Asset vs. Ab All Market | Western Asset vs. Pnc Emerging Markets | Western Asset vs. T Rowe Price | Western Asset vs. Shelton Emerging Markets |
| Aqr Diversified vs. Aqr Large Cap | Aqr Diversified vs. Aqr Large Cap | Aqr Diversified vs. Aqr International Defensive | Aqr Diversified 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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