Correlation Between Aqr Large and Hartford Municipal

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

Diversification Opportunities for Aqr Large and Hartford Municipal

0.62

Correlation Coefficient

Aqr Large  Hartford Municipal

Poor diversification

The 3 months correlation between Aqr and Hartford is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Aqr Large Cap and Hartford Municipal Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Municipal Short 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 Hartford Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartford Municipal Short has no effect on the direction of Aqr Large i.e., Aqr Large and Hartford Municipal go up and down completely randomly.

Pair Corralation between Aqr Large and Hartford Municipal

Assuming the 90 days horizon Aqr Large Cap is expected to under-perform the Hartford Municipal. In addition to that, Aqr Large is 19.23 times more volatile than Hartford Municipal Short. It trades about -0.09 of its total potential returns per unit of risk. Hartford Municipal Short is currently generating about -0.06 per unit of volatility. If you would invest  994.00  in Hartford Municipal Short on October 6, 2024 and sell it today you would lose (3.00) from holding Hartford Municipal Short or give up 0.3% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	97.62%
Values	Daily Returns

Aqr Large Cap  vs.  Hartford Municipal Short

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.

Hartford Municipal Short

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hartford Municipal Short has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Hartford Municipal 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 Hartford Municipal

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

The idea behind Aqr Large Cap and Hartford Municipal Short 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.