Correlation Between Aqr Diversified and Kinetics Small

Can any of the company-specific risk be diversified away by investing in both Aqr Diversified and Kinetics Small 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 Kinetics Small 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 Kinetics Small Cap, you can compare the effects of market volatilities on Aqr Diversified and Kinetics Small 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 Kinetics Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aqr Diversified and Kinetics Small.

Diversification Opportunities for Aqr Diversified and Kinetics Small

-0.16

Correlation Coefficient

Aqr Diversified  Kinetics Small

Good diversification

The 3 months correlation between Aqr and Kinetics is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Aqr Diversified Arbitrage and Kinetics Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinetics Small 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 Kinetics Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinetics Small Cap has no effect on the direction of Aqr Diversified i.e., Aqr Diversified and Kinetics Small go up and down completely randomly.

Pair Corralation between Aqr Diversified and Kinetics Small

Assuming the 90 days horizon Aqr Diversified Arbitrage is expected to generate 0.05 times more return on investment than Kinetics Small. However, Aqr Diversified Arbitrage is 18.5 times less risky than Kinetics Small. It trades about 0.39 of its potential returns per unit of risk. Kinetics Small Cap is currently generating about -0.02 per unit of risk. If you would invest  1,274  in Aqr Diversified Arbitrage on July 18, 2025 and sell it today you would earn a total of  22.00  from holding Aqr Diversified Arbitrage or generate 1.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Aqr Diversified Arbitrage  vs.  Kinetics Small Cap

Aqr Diversified Arbitrage

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Aqr Diversified Arbitrage are ranked lower than 30 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Aqr Diversified is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Kinetics Small Cap

Risk-Adjusted Performance

Weakest

Over the last 90 days Kinetics Small Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Kinetics Small is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Aqr Diversified and Kinetics Small

The main advantage of trading using opposite Aqr Diversified and Kinetics Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aqr Diversified position performs unexpectedly, Kinetics Small 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 Kinetics Small will offset losses from the drop in Kinetics Small's long position.

The idea behind Aqr Diversified Arbitrage and Kinetics Small Cap pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.