Correlation Between Aqr Small and Upright Growth

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

Diversification Opportunities for Aqr Small and Upright Growth

0.34

Correlation Coefficient

Aqr Small  Upright Growth

Weak diversification

The 3 months correlation between Aqr and Upright is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Aqr Small Cap and Upright Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Upright 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 Upright Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Upright Growth has no effect on the direction of Aqr Small i.e., Aqr Small and Upright Growth go up and down completely randomly.

Pair Corralation between Aqr Small and Upright Growth

Assuming the 90 days horizon Aqr Small is expected to generate 5.73 times less return on investment than Upright Growth. But when comparing it to its historical volatility, Aqr Small Cap is 2.76 times less risky than Upright Growth. It trades about 0.16 of its potential returns per unit of risk. Upright Growth Fund is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest  931.00  in Upright Growth Fund on September 18, 2024 and sell it today you would earn a total of  157.00  from holding Upright Growth Fund or generate 16.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Aqr Small Cap  vs.  Upright Growth Fund

Aqr Small Cap

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aqr Small Cap are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Aqr Small may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Upright Growth

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Upright Growth Fund are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Upright Growth showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aqr Small and Upright Growth

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

The idea behind Aqr Small Cap and Upright Growth Fund 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.