Correlation Between Aqr Small and Multimanager Lifestyle

Can any of the company-specific risk be diversified away by investing in both Aqr Small and Multimanager Lifestyle 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 Small and Multimanager Lifestyle into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aqr Small Cap and Multimanager Lifestyle Aggressive, you can compare the effects of market volatilities on Aqr Small and Multimanager Lifestyle 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 Small with a short position of Multimanager Lifestyle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aqr Small and Multimanager Lifestyle.

Diversification Opportunities for Aqr Small and Multimanager Lifestyle

0.97

Correlation Coefficient

Aqr Small  Multimanager Lifestyle

Almost no diversification

The 3 months correlation between Aqr and Multimanager is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Aqr Small Cap and Multimanager Lifestyle Aggress in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multimanager Lifestyle and Aqr Small 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 Small Cap are associated (or correlated) with Multimanager Lifestyle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multimanager Lifestyle has no effect on the direction of Aqr Small i.e., Aqr Small and Multimanager Lifestyle go up and down completely randomly.

Pair Corralation between Aqr Small and Multimanager Lifestyle

Assuming the 90 days horizon Aqr Small Cap is expected to generate 2.02 times more return on investment than Multimanager Lifestyle. However, Aqr Small is 2.02 times more volatile than Multimanager Lifestyle Aggressive. It trades about 0.13 of its potential returns per unit of risk. Multimanager Lifestyle Aggressive is currently generating about 0.17 per unit of risk. If you would invest  1,694  in Aqr Small Cap on May 19, 2025 and sell it today you would earn a total of  169.00  from holding Aqr Small Cap or generate 9.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Aqr Small Cap  vs.  Multimanager Lifestyle Aggress

Aqr Small Cap

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Aqr Small Cap are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Aqr Small may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Multimanager Lifestyle

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Multimanager Lifestyle Aggressive are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Multimanager Lifestyle 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 Small and Multimanager Lifestyle

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

The idea behind Aqr Small Cap and Multimanager Lifestyle Aggressive 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .