Correlation Between Aqr Large and Nationwide International

Can any of the company-specific risk be diversified away by investing in both Aqr Large and Nationwide International 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 Nationwide International 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 Nationwide International Index, you can compare the effects of market volatilities on Aqr Large and Nationwide International 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 Nationwide International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aqr Large and Nationwide International.

Diversification Opportunities for Aqr Large and Nationwide International

-0.29

Correlation Coefficient

Aqr Large  Nationwide International

Very good diversification

The 3 months correlation between Aqr and Nationwide is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Aqr Large Cap and Nationwide International Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nationwide International 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 Nationwide International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nationwide International has no effect on the direction of Aqr Large i.e., Aqr Large and Nationwide International go up and down completely randomly.

Pair Corralation between Aqr Large and Nationwide International

Assuming the 90 days horizon Aqr Large Cap is expected to under-perform the Nationwide International. In addition to that, Aqr Large is 1.63 times more volatile than Nationwide International Index. It trades about -0.07 of its total potential returns per unit of risk. Nationwide International Index is currently generating about 0.21 per unit of volatility. If you would invest  852.00  in Nationwide International Index on December 22, 2024 and sell it today you would earn a total of  90.00  from holding Nationwide International Index or generate 10.56% return on investment over 90 days.

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

Aqr Large Cap  vs.  Nationwide International Index

Aqr Large Cap

Risk-Adjusted Performance

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 fairly strong basic indicators, Aqr Large is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Nationwide International

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Nationwide International Index are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Nationwide International may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Aqr Large and Nationwide International

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

The idea behind Aqr Large Cap and Nationwide International Index 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.