Correlation Between Dow Jones and Aqr Long-short
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Aqr Long-short 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 Dow Jones and Aqr Long-short into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and Aqr Long Short Equity, you can compare the effects of market volatilities on Dow Jones and Aqr Long-short 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 Dow Jones with a short position of Aqr Long-short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Aqr Long-short.
Diversification Opportunities for Dow Jones and Aqr Long-short
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Dow and Aqr is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Aqr Long Short Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqr Long Short and Dow Jones 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 Dow Jones Industrial are associated (or correlated) with Aqr Long-short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aqr Long Short has no effect on the direction of Dow Jones i.e., Dow Jones and Aqr Long-short go up and down completely randomly.
Pair Corralation between Dow Jones and Aqr Long-short
Assuming the 90 days trading horizon Dow Jones is expected to generate 3.4 times less return on investment than Aqr Long-short. In addition to that, Dow Jones is 1.47 times more volatile than Aqr Long Short Equity. It trades about 0.06 of its total potential returns per unit of risk. Aqr Long Short Equity is currently generating about 0.31 per unit of volatility. If you would invest 1,572 in Aqr Long Short Equity on November 18, 2024 and sell it today you would earn a total of 152.00 from holding Aqr Long Short Equity or generate 9.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.39% |
| Values | Daily Returns |
Dow Jones Industrial vs. Aqr Long Short Equity
Performance |
| Timeline |
Dow Jones and Aqr Long-short Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Aqr Long Short Equity
Pair trading matchups for Aqr Long-short
Pair Trading with Dow Jones and Aqr Long-short
The main advantage of trading using opposite Dow Jones and Aqr Long-short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Aqr Long-short 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 Aqr Long-short will offset losses from the drop in Aqr Long-short's long position.| Dow Jones vs. Palomar Holdings | Dow Jones vs. Mesa Air Group | Dow Jones vs. LATAM Airlines Group | Dow Jones vs. Unum Group |
| Aqr Long-short vs. Intal High Relative | Aqr Long-short vs. Rbc Bluebay Global | Aqr Long-short vs. Fundvantage Trust | Aqr Long-short vs. Lgm Risk Managed |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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