Correlation Between Aqr Diversified and M Large
Can any of the company-specific risk be diversified away by investing in both Aqr Diversified and M Large 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 M Large 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 M Large Cap, you can compare the effects of market volatilities on Aqr Diversified and M Large 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 M Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aqr Diversified and M Large.
Diversification Opportunities for Aqr Diversified and M Large
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Aqr and MTCGX is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Aqr Diversified Arbitrage and M Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on M Large 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 M Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of M Large Cap has no effect on the direction of Aqr Diversified i.e., Aqr Diversified and M Large go up and down completely randomly.
Pair Corralation between Aqr Diversified and M Large
Assuming the 90 days horizon Aqr Diversified is expected to generate 6.34 times less return on investment than M Large. But when comparing it to its historical volatility, Aqr Diversified Arbitrage is 10.36 times less risky than M Large. It trades about 0.25 of its potential returns per unit of risk. M Large Cap is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 3,454 in M Large Cap on June 8, 2025 and sell it today you would earn a total of 279.00 from holding M Large Cap or generate 8.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aqr Diversified Arbitrage vs. M Large Cap
Performance |
| Timeline |
| Aqr Diversified Arbitrage |
| M Large Cap |
Aqr Diversified and M Large Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aqr Diversified and M Large
The main advantage of trading using opposite Aqr Diversified and M Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aqr Diversified position performs unexpectedly, M Large 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 M Large will offset losses from the drop in M Large's long position.| Aqr Diversified vs. Aqr Large Cap | Aqr Diversified vs. Aqr Large Cap | Aqr Diversified vs. Aqr International Defensive | Aqr Diversified vs. Aqr International Defensive |
| M Large vs. Vanguard Total Stock | M Large vs. Vanguard 500 Index | M Large vs. Vanguard Total Stock | M Large vs. Vanguard Total Stock |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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