Correlation Between Aqr Small and Oklahoma Municipal
Can any of the company-specific risk be diversified away by investing in both Aqr Small and Oklahoma Municipal 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 Small and Oklahoma Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aqr Small Cap and Oklahoma Municipal Fund, you can compare the effects of market volatilities on Aqr Small and Oklahoma Municipal 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 Small with a short position of Oklahoma Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aqr Small and Oklahoma Municipal.
Diversification Opportunities for Aqr Small and Oklahoma Municipal
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Aqr and Oklahoma is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Aqr Small Cap and Oklahoma Municipal Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oklahoma Municipal and Aqr Small 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 Small Cap are associated (or correlated) with Oklahoma Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oklahoma Municipal has no effect on the direction of Aqr Small i.e., Aqr Small and Oklahoma Municipal go up and down completely randomly.
Pair Corralation between Aqr Small and Oklahoma Municipal
Assuming the 90 days horizon Aqr Small Cap is expected to generate 4.49 times more return on investment than Oklahoma Municipal. However, Aqr Small is 4.49 times more volatile than Oklahoma Municipal Fund. It trades about 0.16 of its potential returns per unit of risk. Oklahoma Municipal Fund is currently generating about 0.13 per unit of risk. If you would invest 2,000 in Aqr Small Cap on September 18, 2024 and sell it today you would earn a total of 53.00 from holding Aqr Small Cap or generate 2.65% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Aqr Small Cap vs. Oklahoma Municipal Fund
Performance |
Timeline |
Aqr Small Cap |
Oklahoma Municipal |
Aqr Small and Oklahoma Municipal Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Aqr Small and Oklahoma Municipal
The main advantage of trading using opposite Aqr Small and Oklahoma Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aqr Small position performs unexpectedly, Oklahoma Municipal 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 Oklahoma Municipal will offset losses from the drop in Oklahoma Municipal's long position.Aqr Small vs. Aqr Large Cap | Aqr Small vs. Aqr Large Cap | Aqr Small vs. Aqr International Defensive | Aqr Small vs. Aqr International Defensive |
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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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