Correlation Between Aqr Diversified and Bbh Intermediate

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

By analyzing existing cross correlation between Aqr Diversified Arbitrage and Bbh Intermediate Municipal, you can compare the effects of market volatilities on Aqr Diversified and Bbh Intermediate 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 Diversified with a short position of Bbh Intermediate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aqr Diversified and Bbh Intermediate.

Diversification Opportunities for Aqr Diversified and Bbh Intermediate

-0.13

Correlation Coefficient

Aqr Diversified  Bbh Intermediate

Good diversification

The 3 months correlation between Aqr and Bbh is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Aqr Diversified Arbitrage and Bbh Intermediate Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bbh Intermediate Mun and Aqr Diversified 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 Diversified Arbitrage are associated (or correlated) with Bbh Intermediate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bbh Intermediate Mun has no effect on the direction of Aqr Diversified i.e., Aqr Diversified and Bbh Intermediate go up and down completely randomly.

Pair Corralation between Aqr Diversified and Bbh Intermediate

Assuming the 90 days horizon Aqr Diversified is expected to generate 1.76 times less return on investment than Bbh Intermediate. But when comparing it to its historical volatility, Aqr Diversified Arbitrage is 1.16 times less risky than Bbh Intermediate. It trades about 0.04 of its potential returns per unit of risk. Bbh Intermediate Municipal is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,001  in Bbh Intermediate Municipal on September 20, 2024 and sell it today you would earn a total of  27.00  from holding Bbh Intermediate Municipal or generate 2.7% return on investment over 90 days.

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

Aqr Diversified Arbitrage  vs.  Bbh Intermediate Municipal

Aqr Diversified Arbitrage

Risk-Adjusted Performance

0 of 100

Very Weak

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

Bbh Intermediate Mun

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bbh Intermediate Municipal has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Bbh Intermediate 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 Diversified and Bbh Intermediate

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

The idea behind Aqr Diversified Arbitrage and Bbh Intermediate Municipal 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.