Correlation Between GM and Aqr Sustainable
Can any of the company-specific risk be diversified away by investing in both GM and Aqr Sustainable 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 GM and Aqr Sustainable into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Aqr Sustainable Long Short, you can compare the effects of market volatilities on GM and Aqr Sustainable 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 GM with a short position of Aqr Sustainable. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Aqr Sustainable.
Diversification Opportunities for GM and Aqr Sustainable
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GM and Aqr is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Aqr Sustainable Long Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqr Sustainable Long and GM 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 General Motors are associated (or correlated) with Aqr Sustainable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aqr Sustainable Long has no effect on the direction of GM i.e., GM and Aqr Sustainable go up and down completely randomly.
Pair Corralation between GM and Aqr Sustainable
Allowing for the 90-day total investment horizon GM is expected to generate 1.12 times less return on investment than Aqr Sustainable. In addition to that, GM is 1.45 times more volatile than Aqr Sustainable Long Short. It trades about 0.05 of its total potential returns per unit of risk. Aqr Sustainable Long Short is currently generating about 0.08 per unit of volatility. If you would invest 907.00 in Aqr Sustainable Long Short on September 2, 2024 and sell it today you would earn a total of 589.00 from holding Aqr Sustainable Long Short or generate 64.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Aqr Sustainable Long Short
Performance |
| Timeline |
| General Motors |
| Aqr Sustainable Long |
GM and Aqr Sustainable Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Aqr Sustainable
The main advantage of trading using opposite GM and Aqr Sustainable positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Aqr Sustainable 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 Sustainable will offset losses from the drop in Aqr Sustainable's long position.The idea behind General Motors and Aqr Sustainable Long Short 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 Sustainable vs. Aqr Large Cap | Aqr Sustainable vs. Aqr Large Cap | Aqr Sustainable vs. Aqr International Defensive | Aqr Sustainable vs. Aqr International Defensive |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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