Correlation Between Aqr International and Bbh Intermediate

Can any of the company-specific risk be diversified away by investing in both Aqr International 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 International 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 International Momentum and Bbh Intermediate Municipal, you can compare the effects of market volatilities on Aqr International 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 International with a short position of Bbh Intermediate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aqr International and Bbh Intermediate.

Diversification Opportunities for Aqr International and Bbh Intermediate

0.41

Correlation Coefficient

Aqr International  Bbh Intermediate

Very weak diversification

The 3 months correlation between Aqr and Bbh is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Aqr International Momentum 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 International 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 International Momentum 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 International i.e., Aqr International and Bbh Intermediate go up and down completely randomly.

Pair Corralation between Aqr International and Bbh Intermediate

Assuming the 90 days horizon Aqr International Momentum is expected to generate 4.56 times more return on investment than Bbh Intermediate. However, Aqr International is 4.56 times more volatile than Bbh Intermediate Municipal. It trades about 0.27 of its potential returns per unit of risk. Bbh Intermediate Municipal is currently generating about 0.12 per unit of risk. If you would invest  1,421  in Aqr International Momentum on October 26, 2024 and sell it today you would earn a total of  56.00  from holding Aqr International Momentum or generate 3.94% return on investment over 90 days.

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

Aqr International Momentum  vs.  Bbh Intermediate Municipal

Aqr International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aqr International Momentum has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Bbh Intermediate Mun

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bbh Intermediate Municipal are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. 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 International and Bbh Intermediate

The main advantage of trading using opposite Aqr International and Bbh Intermediate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aqr International 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 International Momentum 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.

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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.