Correlation Between Aqr Small and Short Term

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

Diversification Opportunities for Aqr Small and Short Term

0.23

Correlation Coefficient

Aqr Small  Short Term

Modest diversification

The 3 months correlation between Aqr and Short is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Aqr Small Cap and Short Term Fund A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Short Term Fund 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 Short Term. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Short Term Fund has no effect on the direction of Aqr Small i.e., Aqr Small and Short Term go up and down completely randomly.

Pair Corralation between Aqr Small and Short Term

If you would invest (100.00) in Short Term Fund A on February 18, 2025 and sell it today you would earn a total of  100.00  from holding Short Term Fund A or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	0.0%
Values	Daily Returns

Aqr Small Cap  vs.  Short Term Fund A

Aqr Small Cap

Risk-Adjusted Performance

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 fairly strong basic indicators, Aqr Small is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Short Term Fund

Risk-Adjusted Performance

Good

Over the last 90 days Short Term Fund A has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Short Term 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 Small and Short Term

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

The idea behind Aqr Small Cap and Short Term Fund A 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.