Correlation Between Aqr Small and Small Pany
Can any of the company-specific risk be diversified away by investing in both Aqr Small and Small Pany 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 Small and Small Pany into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aqr Small Cap and Small Pany Growth, you can compare the effects of market volatilities on Aqr Small and Small Pany 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 Small with a short position of Small Pany. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aqr Small and Small Pany.
Diversification Opportunities for Aqr Small and Small Pany
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Aqr and Small is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Aqr Small Cap and Small Pany Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Pany Growth and Aqr Small 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 Small Cap are associated (or correlated) with Small Pany. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Pany Growth has no effect on the direction of Aqr Small i.e., Aqr Small and Small Pany go up and down completely randomly.
Pair Corralation between Aqr Small and Small Pany
Assuming the 90 days horizon Aqr Small Cap is expected to generate 0.57 times more return on investment than Small Pany. However, Aqr Small Cap is 1.76 times less risky than Small Pany. It trades about -0.07 of its potential returns per unit of risk. Small Pany Growth is currently generating about -0.06 per unit of risk. If you would invest 1,716 in Aqr Small Cap on December 27, 2024 and sell it today you would lose (90.00) from holding Aqr Small Cap or give up 5.24% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Aqr Small Cap vs. Small Pany Growth
Performance |
Timeline |
Aqr Small Cap |
Small Pany Growth |
Aqr Small and Small Pany Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Aqr Small and Small Pany
The main advantage of trading using opposite Aqr Small and Small Pany positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aqr Small position performs unexpectedly, Small Pany 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 Small Pany will offset losses from the drop in Small Pany's long position.Aqr Small vs. Davis Financial Fund | Aqr Small vs. Hewitt Money Market | Aqr Small vs. Schwab Government Money | Aqr Small vs. Ab Government Exchange |
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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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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