Correlation Between Tfa Tactical and Aqr Small

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

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

Diversification Opportunities for Tfa Tactical and Aqr Small

0.35

Correlation Coefficient

Tfa Tactical  Aqr Small

Weak diversification

The 3 months correlation between Tfa and Aqr is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Tfa Tactical Income and Aqr Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqr Small Cap and Tfa Tactical 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 Tfa Tactical Income are associated (or correlated) with Aqr Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aqr Small Cap has no effect on the direction of Tfa Tactical i.e., Tfa Tactical and Aqr Small go up and down completely randomly.

Pair Corralation between Tfa Tactical and Aqr Small

Assuming the 90 days horizon Tfa Tactical Income is expected to under-perform the Aqr Small. But the mutual fund apears to be less risky and, when comparing its historical volatility, Tfa Tactical Income is 4.42 times less risky than Aqr Small. The mutual fund trades about -0.01 of its potential returns per unit of risk. The Aqr Small Cap is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,543  in Aqr Small Cap on October 21, 2024 and sell it today you would earn a total of  199.00  from holding Aqr Small Cap or generate 12.9% return on investment over 90 days.

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

Tfa Tactical Income  vs.  Aqr Small Cap

Tfa Tactical Income

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Tfa Tactical Income are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Tfa Tactical is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Aqr Small Cap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aqr Small Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Tfa Tactical and Aqr Small

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

The idea behind Tfa Tactical Income and Aqr Small Cap 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.