Correlation Between Aqr Large and All Asset

Can any of the company-specific risk be diversified away by investing in both Aqr Large and All Asset 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 All Asset 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 All Asset Fund, you can compare the effects of market volatilities on Aqr Large and All Asset 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 All Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aqr Large and All Asset.

Diversification Opportunities for Aqr Large and All Asset

-0.33

Correlation Coefficient

Aqr Large  All Asset

Very good diversification

The 3 months correlation between Aqr and All is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Aqr Large Cap and All Asset Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on All Asset Fund 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 All Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of All Asset Fund has no effect on the direction of Aqr Large i.e., Aqr Large and All Asset go up and down completely randomly.

Pair Corralation between Aqr Large and All Asset

Assuming the 90 days horizon Aqr Large Cap is expected to generate 2.39 times more return on investment than All Asset. However, Aqr Large is 2.39 times more volatile than All Asset Fund. It trades about 0.18 of its potential returns per unit of risk. All Asset Fund is currently generating about -0.06 per unit of risk. If you would invest  2,325  in Aqr Large Cap on September 17, 2024 and sell it today you would earn a total of  231.00  from holding Aqr Large Cap or generate 9.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Aqr Large Cap  vs.  All Asset Fund

Aqr Large Cap

Risk-Adjusted Performance

13 of 100

Good

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

All Asset Fund

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days All Asset Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, All Asset is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Aqr Large and All Asset

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

The idea behind Aqr Large Cap and All Asset Fund 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.