Correlation Between Aqr Large and Seafarer Overseas

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

Diversification Opportunities for Aqr Large and Seafarer Overseas

-0.53

Correlation Coefficient

Aqr Large  Seafarer Overseas

Excellent diversification

The 3 months correlation between Aqr and Seafarer is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Aqr Large Cap and Seafarer Overseas Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seafarer Overseas Value 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 Seafarer Overseas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seafarer Overseas Value has no effect on the direction of Aqr Large i.e., Aqr Large and Seafarer Overseas go up and down completely randomly.

Pair Corralation between Aqr Large and Seafarer Overseas

Assuming the 90 days horizon Aqr Large Cap is expected to generate 0.75 times more return on investment than Seafarer Overseas. However, Aqr Large Cap is 1.33 times less risky than Seafarer Overseas. It trades about 0.16 of its potential returns per unit of risk. Seafarer Overseas Value is currently generating about -0.21 per unit of risk. If you would invest  2,496  in Aqr Large Cap on September 16, 2024 and sell it today you would earn a total of  60.00  from holding Aqr Large Cap or generate 2.4% return on investment over 90 days.

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

Aqr Large Cap  vs.  Seafarer Overseas Value

Aqr Large Cap

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aqr Large Cap are ranked lower than 14 (%) 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.

Seafarer Overseas Value

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Seafarer Overseas Value has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong essential indicators, Seafarer Overseas 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 Seafarer Overseas

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

The idea behind Aqr Large Cap and Seafarer Overseas Value 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.