Correlation Between Aqr Large and Federated Kaufmann

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

Diversification Opportunities for Aqr Large and Federated Kaufmann

0.67

Correlation Coefficient

Aqr Large  Federated Kaufmann

Poor diversification

The 3 months correlation between Aqr and Federated is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Aqr Large Cap and Federated Kaufmann Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Kaufmann Large 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 Federated Kaufmann. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Kaufmann Large has no effect on the direction of Aqr Large i.e., Aqr Large and Federated Kaufmann go up and down completely randomly.

Pair Corralation between Aqr Large and Federated Kaufmann

Assuming the 90 days horizon Aqr Large Cap is expected to generate 0.56 times more return on investment than Federated Kaufmann. However, Aqr Large Cap is 1.8 times less risky than Federated Kaufmann. It trades about 0.04 of its potential returns per unit of risk. Federated Kaufmann Large is currently generating about -0.01 per unit of risk. If you would invest  1,844  in Aqr Large Cap on October 9, 2024 and sell it today you would earn a total of  384.00  from holding Aqr Large Cap or generate 20.82% return on investment over 90 days.

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

Aqr Large Cap  vs.  Federated Kaufmann Large

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.

Federated Kaufmann Large

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Federated Kaufmann Large has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's forward-looking signals remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Aqr Large and Federated Kaufmann

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

The idea behind Aqr Large Cap and Federated Kaufmann Large 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.