Correlation Between Aqr Large and Smallcap
Can any of the company-specific risk be diversified away by investing in both Aqr Large and Smallcap 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 Large and Smallcap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aqr Large Cap and Smallcap Sp 600, you can compare the effects of market volatilities on Aqr Large and Smallcap 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 Large with a short position of Smallcap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aqr Large and Smallcap.
Diversification Opportunities for Aqr Large and Smallcap
Almost no diversification
The 3 months correlation between AQR and Smallcap is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Aqr Large Cap and Smallcap Sp 600 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smallcap Sp 600 and Aqr Large 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 Large Cap are associated (or correlated) with Smallcap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smallcap Sp 600 has no effect on the direction of Aqr Large i.e., Aqr Large and Smallcap go up and down completely randomly.
Pair Corralation between Aqr Large and Smallcap
Assuming the 90 days horizon Aqr Large is expected to generate 2.2 times less return on investment than Smallcap. But when comparing it to its historical volatility, Aqr Large Cap is 1.87 times less risky than Smallcap. It trades about 0.19 of its potential returns per unit of risk. Smallcap Sp 600 is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 2,622 in Smallcap Sp 600 on June 5, 2025 and sell it today you would earn a total of 162.00 from holding Smallcap Sp 600 or generate 6.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aqr Large Cap vs. Smallcap Sp 600
Performance |
| Timeline |
| Aqr Large Cap |
| Smallcap Sp 600 |
Aqr Large and Smallcap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aqr Large and Smallcap
The main advantage of trading using opposite Aqr Large and Smallcap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aqr Large position performs unexpectedly, Smallcap 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 Smallcap will offset losses from the drop in Smallcap's long position.| Aqr Large vs. Harding Loevner Emerging | Aqr Large vs. Transamerica Emerging Markets | Aqr Large vs. Doubleline Emerging Markets | Aqr Large vs. Ashmore Emerging Markets |
| Smallcap vs. Aqr Large Cap | Smallcap vs. Buffalo Large Cap | Smallcap vs. Dana Large Cap | Smallcap vs. Vanguard Large Cap Index |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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