Correlation Between Shelton Emerging and Aqr Long-short
Can any of the company-specific risk be diversified away by investing in both Shelton Emerging 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 Shelton Emerging 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 Shelton Emerging Markets and Aqr Long Short Equity, you can compare the effects of market volatilities on Shelton Emerging 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 Shelton Emerging with a short position of Aqr Long-short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shelton Emerging and Aqr Long-short.
Diversification Opportunities for Shelton Emerging and Aqr Long-short
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Shelton and Aqr is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Shelton Emerging Markets 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 Shelton Emerging 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 Shelton Emerging Markets 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 Shelton Emerging i.e., Shelton Emerging and Aqr Long-short go up and down completely randomly.
Pair Corralation between Shelton Emerging and Aqr Long-short
Assuming the 90 days horizon Shelton Emerging Markets is expected to under-perform the Aqr Long-short. In addition to that, Shelton Emerging is 2.28 times more volatile than Aqr Long Short Equity. It trades about -0.22 of its total potential returns per unit of risk. Aqr Long Short Equity is currently generating about 0.46 per unit of volatility. If you would invest 1,581 in Aqr Long Short Equity on September 2, 2024 and sell it today you would earn a total of 69.00 from holding Aqr Long Short Equity or generate 4.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shelton Emerging Markets vs. Aqr Long Short Equity
Performance |
| Timeline |
| Shelton Emerging Markets |
| Aqr Long Short |
Shelton Emerging and Aqr Long-short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shelton Emerging and Aqr Long-short
The main advantage of trading using opposite Shelton Emerging and Aqr Long-short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shelton Emerging 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.The idea behind Shelton Emerging Markets and Aqr Long Short Equity 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.| Aqr Long-short vs. Pgim Conservative Retirement | Aqr Long-short vs. Prudential Core Conservative | Aqr Long-short vs. Jhancock Diversified Macro | Aqr Long-short vs. Harbor Diversified International |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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