Correlation Between Aqr Equity and Vanguard Global

Can any of the company-specific risk be diversified away by investing in both Aqr Equity and Vanguard Global 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 Equity and Vanguard Global into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aqr Equity Market and Vanguard Global Minimum, you can compare the effects of market volatilities on Aqr Equity and Vanguard Global 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 Equity with a short position of Vanguard Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aqr Equity and Vanguard Global.

Diversification Opportunities for Aqr Equity and Vanguard Global

0.93

Correlation Coefficient

Aqr Equity  Vanguard Global

Almost no diversification

The 3 months correlation between Aqr and Vanguard is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Aqr Equity Market and Vanguard Global Minimum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Global Minimum and Aqr Equity 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 Equity Market are associated (or correlated) with Vanguard Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Global Minimum has no effect on the direction of Aqr Equity i.e., Aqr Equity and Vanguard Global go up and down completely randomly.

Pair Corralation between Aqr Equity and Vanguard Global

Assuming the 90 days horizon Aqr Equity Market is expected to generate 0.74 times more return on investment than Vanguard Global. However, Aqr Equity Market is 1.36 times less risky than Vanguard Global. It trades about 0.39 of its potential returns per unit of risk. Vanguard Global Minimum is currently generating about 0.19 per unit of risk. If you would invest  981.00  in Aqr Equity Market on December 28, 2024 and sell it today you would earn a total of  92.00  from holding Aqr Equity Market or generate 9.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.36%
Values	Daily Returns

Aqr Equity Market  vs.  Vanguard Global Minimum

Aqr Equity Market

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Aqr Equity Market are ranked lower than 30 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Aqr Equity may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Vanguard Global Minimum

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Global Minimum are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Vanguard Global 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 Equity and Vanguard Global

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

The idea behind Aqr Equity Market and Vanguard Global Minimum 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.