Correlation Between Biotechnology Fund and Aqr Tm

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

By analyzing existing cross correlation between Biotechnology Fund Class and Aqr Tm Small, you can compare the effects of market volatilities on Biotechnology Fund and Aqr Tm 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 Biotechnology Fund with a short position of Aqr Tm. Check out your portfolio center. Please also check ongoing floating volatility patterns of Biotechnology Fund and Aqr Tm.

Diversification Opportunities for Biotechnology Fund and Aqr Tm

0.0

Correlation Coefficient

Biotechnology Fund  Aqr Tm

Pay attention - limited upside

The 3 months correlation between Biotechnology and Aqr is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Biotechnology Fund Class and Aqr Tm Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqr Tm Small and Biotechnology Fund 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 Biotechnology Fund Class are associated (or correlated) with Aqr Tm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aqr Tm Small has no effect on the direction of Biotechnology Fund i.e., Biotechnology Fund and Aqr Tm go up and down completely randomly.

Pair Corralation between Biotechnology Fund and Aqr Tm

If you would invest  4,061  in Biotechnology Fund Class on December 31, 2024 and sell it today you would earn a total of  23.00  from holding Biotechnology Fund Class or generate 0.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.64%
Values	Daily Returns

Biotechnology Fund Class  vs.  Aqr Tm Small

Biotechnology Fund Class

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Biotechnology Fund Class are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Biotechnology Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Aqr Tm Small

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aqr Tm Small has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Aqr Tm is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Biotechnology Fund and Aqr Tm

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

The idea behind Biotechnology Fund Class and Aqr Tm Small 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.