Correlation Between Wcm Focused and Aqr Global

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

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

Diversification Opportunities for Wcm Focused and Aqr Global

-0.18

Correlation Coefficient

Wcm Focused  Aqr Global

Good diversification

The 3 months correlation between Wcm and Aqr is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Wcm Focused Small and Aqr Global Macro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqr Global Macro and Wcm Focused 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 Wcm Focused Small are associated (or correlated) with Aqr Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aqr Global Macro has no effect on the direction of Wcm Focused i.e., Wcm Focused and Aqr Global go up and down completely randomly.

Pair Corralation between Wcm Focused and Aqr Global

Assuming the 90 days horizon Wcm Focused Small is expected to under-perform the Aqr Global. In addition to that, Wcm Focused is 1.45 times more volatile than Aqr Global Macro. It trades about -0.33 of its total potential returns per unit of risk. Aqr Global Macro is currently generating about 0.0 per unit of volatility. If you would invest  948.00  in Aqr Global Macro on October 10, 2024 and sell it today you would earn a total of  0.00  from holding Aqr Global Macro or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Wcm Focused Small  vs.  Aqr Global Macro

Wcm Focused Small

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wcm Focused Small has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's forward-looking indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Aqr Global Macro

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Aqr Global Macro are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Aqr 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 Wcm Focused and Aqr Global

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

The idea behind Wcm Focused Small and Aqr Global Macro 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.