Correlation Between Aqr Large and Ab Government

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

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

Diversification Opportunities for Aqr Large and Ab Government

0.0

Correlation Coefficient

Aqr Large  Ab Government

Pay attention - limited upside

The 3 months correlation between Aqr and AIEXX is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Aqr Large Cap and Ab Government Exchange in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Government Exchange and Aqr Large 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 Large Cap are associated (or correlated) with Ab Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Government Exchange has no effect on the direction of Aqr Large i.e., Aqr Large and Ab Government go up and down completely randomly.

Pair Corralation between Aqr Large and Ab Government

Assuming the 90 days horizon Aqr Large is expected to generate 145.58 times less return on investment than Ab Government. But when comparing it to its historical volatility, Aqr Large Cap is 42.91 times less risky than Ab Government. It trades about 0.03 of its potential returns per unit of risk. Ab Government Exchange is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  411.00  in Ab Government Exchange on October 4, 2024 and sell it today you would lose (311.00) from holding Ab Government Exchange or give up 75.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	52.53%
Values	Daily Returns

Aqr Large Cap  vs.  Ab Government Exchange

Aqr Large Cap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aqr Large Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Ab Government Exchange

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ab Government Exchange has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Ab Government 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 Large and Ab Government

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

The idea behind Aqr Large Cap and Ab Government Exchange 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.