Correlation Between Aqr International and Selected American

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

Diversification Opportunities for Aqr International and Selected American

-0.07

Correlation Coefficient

Aqr International  Selected American

Good diversification

The 3 months correlation between Aqr and Selected is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Aqr International Defensive and Selected American Shares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Selected American Shares 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 Selected American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Selected American Shares has no effect on the direction of Aqr International i.e., Aqr International and Selected American go up and down completely randomly.

Pair Corralation between Aqr International and Selected American

Assuming the 90 days horizon Aqr International Defensive is expected to generate 0.43 times more return on investment than Selected American. However, Aqr International Defensive is 2.31 times less risky than Selected American. It trades about 0.03 of its potential returns per unit of risk. Selected American Shares is currently generating about 0.0 per unit of risk. If you would invest  1,602  in Aqr International Defensive on May 2, 2025 and sell it today you would earn a total of  14.00  from holding Aqr International Defensive or generate 0.87% return on investment over 90 days.

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

Aqr International Defensive  vs.  Selected American Shares

Aqr International

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Aqr International Defensive are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Aqr International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Selected American Shares

Risk-Adjusted Performance

Very Weak

Over the last 90 days Selected American Shares has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Selected American 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 International and Selected American

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

The idea behind Aqr International Defensive and Selected American Shares 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.

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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.