Correlation Between Aqr Diversified and Northern Mid

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

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

Diversification Opportunities for Aqr Diversified and Northern Mid

0.46

Correlation Coefficient

Aqr Diversified  Northern Mid

Very weak diversification

The 3 months correlation between Aqr and Northern is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Aqr Diversified Arbitrage and Northern Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Mid Cap and Aqr Diversified 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 Diversified Arbitrage are associated (or correlated) with Northern Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Mid Cap has no effect on the direction of Aqr Diversified i.e., Aqr Diversified and Northern Mid go up and down completely randomly.

Pair Corralation between Aqr Diversified and Northern Mid

Assuming the 90 days horizon Aqr Diversified is expected to generate 4.19 times less return on investment than Northern Mid. But when comparing it to its historical volatility, Aqr Diversified Arbitrage is 12.06 times less risky than Northern Mid. It trades about 0.38 of its potential returns per unit of risk. Northern Mid Cap is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  1,886  in Northern Mid Cap on July 24, 2025 and sell it today you would earn a total of  310.00  from holding Northern Mid Cap or generate 16.44% return on investment over 90 days.

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

Aqr Diversified Arbitrage  vs.  Northern Mid Cap

Aqr Diversified Arbitrage

Risk-Adjusted Performance

High

Compared to the overall equity markets, risk-adjusted returns on investments in Aqr Diversified Arbitrage are ranked lower than 34 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Aqr Diversified is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Northern Mid Cap

Risk-Adjusted Performance

Weak

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

Pair Trading with Aqr Diversified and Northern Mid

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

The idea behind Aqr Diversified Arbitrage and Northern Mid 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .