Correlation Between Federated Hermes and Aqr Diversified
Can any of the company-specific risk be diversified away by investing in both Federated Hermes and Aqr Diversified 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 Federated Hermes and Aqr Diversified into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Hermes Conservative and Aqr Diversified Arbitrage, you can compare the effects of market volatilities on Federated Hermes and Aqr Diversified 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 Federated Hermes with a short position of Aqr Diversified. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Hermes and Aqr Diversified.
Diversification Opportunities for Federated Hermes and Aqr Diversified
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Federated and AQR is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Federated Hermes Conservative and Aqr Diversified Arbitrage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqr Diversified Arbitrage and Federated Hermes 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 Federated Hermes Conservative are associated (or correlated) with Aqr Diversified. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aqr Diversified Arbitrage has no effect on the direction of Federated Hermes i.e., Federated Hermes and Aqr Diversified go up and down completely randomly.
Pair Corralation between Federated Hermes and Aqr Diversified
Assuming the 90 days horizon Federated Hermes is expected to generate 1.06 times less return on investment than Aqr Diversified. In addition to that, Federated Hermes is 1.21 times more volatile than Aqr Diversified Arbitrage. It trades about 0.25 of its total potential returns per unit of risk. Aqr Diversified Arbitrage is currently generating about 0.32 per unit of volatility. If you would invest 1,269 in Aqr Diversified Arbitrage on July 7, 2025 and sell it today you would earn a total of 19.00 from holding Aqr Diversified Arbitrage or generate 1.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Hermes Conservative vs. Aqr Diversified Arbitrage
Performance |
| Timeline |
| Federated Hermes Con |
| Aqr Diversified Arbitrage |
Federated Hermes and Aqr Diversified Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Hermes and Aqr Diversified
The main advantage of trading using opposite Federated Hermes and Aqr Diversified positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Hermes position performs unexpectedly, Aqr Diversified 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 Diversified will offset losses from the drop in Aqr Diversified's long position.| Federated Hermes vs. Federated Emerging Market | Federated Hermes vs. Federated Mdt All | Federated Hermes vs. Federated Mdt Balanced | Federated Hermes vs. Federated Global Allocation |
| Aqr Diversified vs. Aqr Large Cap | Aqr Diversified vs. Aqr International Defensive | Aqr Diversified vs. Aqr International Defensive | Aqr Diversified vs. Aqr International Defensive |
Check out your portfolio center.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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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