Correlation Between Aqr International and Target
Can any of the company-specific risk be diversified away by investing in both Aqr International and Target 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 Target 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 Target, you can compare the effects of market volatilities on Aqr International and Target 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 Target. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aqr International and Target.
Diversification Opportunities for Aqr International and Target
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Aqr and Target is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Aqr International Defensive and Target in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Target 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 Target. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Target has no effect on the direction of Aqr International i.e., Aqr International and Target go up and down completely randomly.
Pair Corralation between Aqr International and Target
Assuming the 90 days horizon Aqr International Defensive is expected to under-perform the Target. But the mutual fund apears to be less risky and, when comparing its historical volatility, Aqr International Defensive is 2.25 times less risky than Target. The mutual fund trades about -0.29 of its potential returns per unit of risk. The Target is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 16,759 in Target on January 17, 2024 and sell it today you would lose (258.00) from holding Target or give up 1.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Aqr International Defensive vs. Target
Performance |
| Timeline |
| Aqr International |
| Target |
Aqr International and Target Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aqr International and Target
The main advantage of trading using opposite Aqr International and Target positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aqr International position performs unexpectedly, Target 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 Target will offset losses from the drop in Target's long position.| Aqr International vs. Aqr Large Cap | Aqr International vs. Aqr Large Cap | Aqr International vs. Aqr Long Short Equity | Aqr International vs. Aqr Long Short Equity |
| Target vs. Costco Wholesale Corp | Target vs. BJs Wholesale Club | Target vs. Dollar Tree | Target vs. Dollar General |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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