Correlation Between Aqr Large and North Carolina

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

Diversification Opportunities for Aqr Large and North Carolina

0.05

Correlation Coefficient

Aqr Large  North Carolina

Significant diversification

The 3 months correlation between Aqr and North is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Aqr Large Cap and North Carolina Tax Free in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on North Carolina Tax 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 North Carolina. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of North Carolina Tax has no effect on the direction of Aqr Large i.e., Aqr Large and North Carolina go up and down completely randomly.

Pair Corralation between Aqr Large and North Carolina

Assuming the 90 days horizon Aqr Large Cap is expected to generate 3.93 times more return on investment than North Carolina. However, Aqr Large is 3.93 times more volatile than North Carolina Tax Free. It trades about 0.17 of its potential returns per unit of risk. North Carolina Tax Free is currently generating about 0.0 per unit of risk. If you would invest  2,322  in Aqr Large Cap on September 14, 2024 and sell it today you would earn a total of  225.00  from holding Aqr Large Cap or generate 9.69% return on investment over 90 days.

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

Aqr Large Cap  vs.  North Carolina Tax Free

Aqr Large Cap

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aqr Large Cap are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Aqr Large may actually be approaching a critical reversion point that can send shares even higher in January 2025.

North Carolina Tax

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days North Carolina Tax Free has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, North Carolina 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 North Carolina

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

The idea behind Aqr Large Cap and North Carolina Tax Free 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.