Correlation Between Firsthand Alternative and Aqr Large
Can any of the company-specific risk be diversified away by investing in both Firsthand Alternative 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 Firsthand Alternative and Aqr Large into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Firsthand Alternative Energy and Aqr Large Cap, you can compare the effects of market volatilities on Firsthand Alternative 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 Firsthand Alternative with a short position of Aqr Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Firsthand Alternative and Aqr Large.
Diversification Opportunities for Firsthand Alternative and Aqr Large
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Firsthand and Aqr is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Firsthand Alternative Energy 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 Firsthand Alternative 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 Firsthand Alternative Energy 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 Firsthand Alternative i.e., Firsthand Alternative and Aqr Large go up and down completely randomly.
Pair Corralation between Firsthand Alternative and Aqr Large
Assuming the 90 days horizon Firsthand Alternative Energy is expected to under-perform the Aqr Large. In addition to that, Firsthand Alternative is 1.33 times more volatile than Aqr Large Cap. It trades about -0.02 of its total potential returns per unit of risk. Aqr Large Cap is currently generating about 0.07 per unit of volatility. If you would invest 1,589 in Aqr Large Cap on September 12, 2024 and sell it today you would earn a total of 588.00 from holding Aqr Large Cap or generate 37.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Firsthand Alternative Energy vs. Aqr Large Cap
Performance |
Timeline |
Firsthand Alternative |
Aqr Large Cap |
Firsthand Alternative and Aqr Large Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Firsthand Alternative and Aqr Large
The main advantage of trading using opposite Firsthand Alternative and Aqr Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Firsthand Alternative 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.Firsthand Alternative vs. Guinness Atkinson Alternative | Firsthand Alternative vs. Calvert Global Energy | Firsthand Alternative vs. New Alternatives Fund | Firsthand Alternative vs. Shelton Green Alpha |
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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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