Correlation Between Aqr Risk and Aqr Large

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

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

Diversification Opportunities for Aqr Risk and Aqr Large

0.08

Correlation Coefficient

Aqr Risk  Aqr Large

Significant diversification

The 3 months correlation between Aqr and Aqr is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Aqr Risk Balanced Modities and Aqr Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqr Large Cap and Aqr Risk 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 Risk Balanced Modities are associated (or correlated) with Aqr Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aqr Large Cap has no effect on the direction of Aqr Risk i.e., Aqr Risk and Aqr Large go up and down completely randomly.

Pair Corralation between Aqr Risk and Aqr Large

Assuming the 90 days horizon Aqr Risk Balanced Modities is expected to generate 0.88 times more return on investment than Aqr Large. However, Aqr Risk Balanced Modities is 1.14 times less risky than Aqr Large. It trades about 0.19 of its potential returns per unit of risk. Aqr Large Cap is currently generating about 0.07 per unit of risk. If you would invest  862.00  in Aqr Risk Balanced Modities on September 15, 2024 and sell it today you would earn a total of  24.00  from holding Aqr Risk Balanced Modities or generate 2.78% return on investment over 90 days.

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

Aqr Risk Balanced Modities  vs.  Aqr Large Cap

Aqr Risk Balanced

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Aqr Risk Balanced Modities are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Aqr Risk is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Aqr Large Cap

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aqr Large Cap are ranked lower than 14 (%) 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.

Pair Trading with Aqr Risk and Aqr Large

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

The idea behind Aqr Risk Balanced Modities and Aqr Large Cap 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.

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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.