Correlation Between Aqr Large and Amg Gwk

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

Diversification Opportunities for Aqr Large and Amg Gwk

0.92

Correlation Coefficient

Aqr Large  Amg Gwk

Almost no diversification

The 3 months correlation between Aqr and Amg is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Aqr Large Cap and Amg Gwk Smallmid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amg Gwk Smallmid 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 Amg Gwk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amg Gwk Smallmid has no effect on the direction of Aqr Large i.e., Aqr Large and Amg Gwk go up and down completely randomly.

Pair Corralation between Aqr Large and Amg Gwk

Assuming the 90 days horizon Aqr Large is expected to generate 1.23 times less return on investment than Amg Gwk. In addition to that, Aqr Large is 1.08 times more volatile than Amg Gwk Smallmid. It trades about 0.05 of its total potential returns per unit of risk. Amg Gwk Smallmid is currently generating about 0.06 per unit of volatility. If you would invest  1,513  in Amg Gwk Smallmid on September 5, 2024 and sell it today you would earn a total of  532.00  from holding Amg Gwk Smallmid or generate 35.16% return on investment over 90 days.

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

Aqr Large Cap  vs.  Amg Gwk Smallmid

Aqr Large Cap

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Aqr Large Cap are ranked lower than 20 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Aqr Large showed solid returns over the last few months and may actually be approaching a breakup point.

Amg Gwk Smallmid

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Amg Gwk Smallmid are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Amg Gwk may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Aqr Large and Amg Gwk

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

The idea behind Aqr Large Cap and Amg Gwk Smallmid 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.