Correlation Between Aqr Large and Columbia Contrarian

Can any of the company-specific risk be diversified away by investing in both Aqr Large and Columbia Contrarian 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 Aqr Large and Columbia Contrarian into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aqr Large Cap and Columbia Trarian Core, you can compare the effects of market volatilities on Aqr Large and Columbia Contrarian 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 Aqr Large with a short position of Columbia Contrarian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aqr Large and Columbia Contrarian.

Diversification Opportunities for Aqr Large and Columbia Contrarian

0.99

Correlation Coefficient

Aqr Large  Columbia Contrarian

No risk reduction

The 3 months correlation between Aqr and Columbia is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Aqr Large Cap and Columbia Trarian Core in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Trarian Core and Aqr Large 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 Aqr Large Cap are associated (or correlated) with Columbia Contrarian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Trarian Core has no effect on the direction of Aqr Large i.e., Aqr Large and Columbia Contrarian go up and down completely randomly.

Pair Corralation between Aqr Large and Columbia Contrarian

Assuming the 90 days horizon Aqr Large Cap is expected to generate 1.25 times more return on investment than Columbia Contrarian. However, Aqr Large is 1.25 times more volatile than Columbia Trarian Core. It trades about 0.23 of its potential returns per unit of risk. Columbia Trarian Core is currently generating about 0.17 per unit of risk. If you would invest  2,264  in Aqr Large Cap on September 3, 2024 and sell it today you would earn a total of  317.00  from holding Aqr Large Cap or generate 14.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Aqr Large Cap  vs.  Columbia Trarian Core

Aqr Large Cap

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Aqr Large Cap are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Aqr Large showed solid returns over the last few months and may actually be approaching a breakup point.

Columbia Trarian Core

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Columbia Trarian Core are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Columbia Contrarian may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Aqr Large and Columbia Contrarian

The main advantage of trading using opposite Aqr Large and Columbia Contrarian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aqr Large position performs unexpectedly, Columbia Contrarian 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 Columbia Contrarian will offset losses from the drop in Columbia Contrarian's long position.

The idea behind Aqr Large Cap and Columbia Trarian Core pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.