Correlation Between Aqr International and International Growth
Can any of the company-specific risk be diversified away by investing in both Aqr International and International Growth 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 International and International Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aqr International Defensive and International Growth And, you can compare the effects of market volatilities on Aqr International and International Growth 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 International with a short position of International Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aqr International and International Growth.
Diversification Opportunities for Aqr International and International Growth
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Aqr and International is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Aqr International Defensive and International Growth And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Growth And and Aqr International 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 International Defensive are associated (or correlated) with International Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Growth And has no effect on the direction of Aqr International i.e., Aqr International and International Growth go up and down completely randomly.
Pair Corralation between Aqr International and International Growth
Assuming the 90 days horizon Aqr International Defensive is expected to under-perform the International Growth. But the mutual fund apears to be less risky and, when comparing its historical volatility, Aqr International Defensive is 1.08 times less risky than International Growth. The mutual fund trades about -0.14 of its potential returns per unit of risk. The International Growth And is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest 3,763 in International Growth And on January 26, 2024 and sell it today you would lose (59.00) from holding International Growth And or give up 1.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aqr International Defensive vs. International Growth And
Performance |
| Timeline |
| Aqr International |
| International Growth And |
Aqr International and International Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aqr International and International Growth
The main advantage of trading using opposite Aqr International and International Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aqr International position performs unexpectedly, International Growth 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 International Growth will offset losses from the drop in International Growth's long position.| Aqr International vs. Vanguard Total International | Aqr International vs. Vanguard Developed Markets | Aqr International vs. Fidelity International Index |
| International Growth vs. Vanguard Total International | International Growth vs. Vanguard Developed Markets | International Growth vs. Fidelity International 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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