Correlation Between Aqr Large and Lsv Us

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

Diversification Opportunities for Aqr Large and Lsv Us

0.37

Correlation Coefficient

Aqr Large  Lsv Us

Weak diversification

The 3 months correlation between Aqr and Lsv is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Aqr Large Cap and Lsv Managed Volatility in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lsv Managed Volatility 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 Lsv Us. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lsv Managed Volatility has no effect on the direction of Aqr Large i.e., Aqr Large and Lsv Us go up and down completely randomly.

Pair Corralation between Aqr Large and Lsv Us

Assuming the 90 days horizon Aqr Large is expected to generate 1.42 times less return on investment than Lsv Us. But when comparing it to its historical volatility, Aqr Large Cap is 1.07 times less risky than Lsv Us. It trades about 0.08 of its potential returns per unit of risk. Lsv Managed Volatility is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  1,029  in Lsv Managed Volatility on December 27, 2024 and sell it today you would earn a total of  47.00  from holding Lsv Managed Volatility or generate 4.57% return on investment over 90 days.

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

Aqr Large Cap  vs.  Lsv Managed Volatility

Aqr Large Cap

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Aqr Large Cap are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Aqr Large is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Lsv Managed Volatility

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lsv Managed Volatility are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong primary indicators, Lsv Us 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 Lsv Us

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

The idea behind Aqr Large Cap and Lsv Managed Volatility 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.