Correlation Between Financials Ultrasector and Aqr Long-short
Can any of the company-specific risk be diversified away by investing in both Financials Ultrasector 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 Financials Ultrasector 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 Financials Ultrasector Profund and Aqr Long Short Equity, you can compare the effects of market volatilities on Financials Ultrasector 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 Financials Ultrasector with a short position of Aqr Long-short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Financials Ultrasector and Aqr Long-short.
Diversification Opportunities for Financials Ultrasector and Aqr Long-short
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Financials and Aqr is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Financials Ultrasector Profund 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 Financials Ultrasector 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 Financials Ultrasector Profund 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 Financials Ultrasector i.e., Financials Ultrasector and Aqr Long-short go up and down completely randomly.
Pair Corralation between Financials Ultrasector and Aqr Long-short
Assuming the 90 days horizon Financials Ultrasector Profund is expected to generate 4.87 times more return on investment than Aqr Long-short. However, Financials Ultrasector is 4.87 times more volatile than Aqr Long Short Equity. It trades about 0.26 of its potential returns per unit of risk. Aqr Long Short Equity is currently generating about 0.47 per unit of risk. If you would invest 4,069 in Financials Ultrasector Profund on August 30, 2024 and sell it today you would earn a total of 529.00 from holding Financials Ultrasector Profund or generate 13.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Financials Ultrasector Profund vs. Aqr Long Short Equity
Performance |
| Timeline |
| Financials Ultrasector |
| Aqr Long Short |
Financials Ultrasector and Aqr Long-short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Financials Ultrasector and Aqr Long-short
The main advantage of trading using opposite Financials Ultrasector and Aqr Long-short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Financials Ultrasector 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.| Financials Ultrasector vs. Direxion Monthly Nasdaq 100 | Financials Ultrasector vs. HUMANA INC | Financials Ultrasector vs. Aquagold International | Financials Ultrasector vs. Barloworld Ltd ADR |
| Aqr Long-short vs. Nova Fund Class | Aqr Long-short vs. Volumetric Fund Volumetric | Aqr Long-short vs. Qs Growth Fund | Aqr Long-short vs. Versatile Bond Portfolio |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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