Correlation Between Prudential Short and Aqr Long
Can any of the company-specific risk be diversified away by investing in both Prudential Short and Aqr Long 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 Prudential Short and Aqr Long into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prudential Short Duration and Aqr Long Short Equity, you can compare the effects of market volatilities on Prudential Short and Aqr Long 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 Prudential Short with a short position of Aqr Long. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential Short and Aqr Long.
Diversification Opportunities for Prudential Short and Aqr Long
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Prudential and Aqr is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Short Duration 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 Prudential Short 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 Prudential Short Duration are associated (or correlated) with Aqr Long. 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 Prudential Short i.e., Prudential Short and Aqr Long go up and down completely randomly.
Pair Corralation between Prudential Short and Aqr Long
Assuming the 90 days horizon Prudential Short is expected to generate 13.64 times less return on investment than Aqr Long. But when comparing it to its historical volatility, Prudential Short Duration is 4.04 times less risky than Aqr Long. It trades about 0.07 of its potential returns per unit of risk. Aqr Long Short Equity is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 1,582 in Aqr Long Short Equity on September 13, 2024 and sell it today you would earn a total of 78.00 from holding Aqr Long Short Equity or generate 4.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prudential Short Duration vs. Aqr Long Short Equity
Performance |
| Timeline |
| Prudential Short Duration |
| Aqr Long Short |
Prudential Short and Aqr Long Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prudential Short and Aqr Long
The main advantage of trading using opposite Prudential Short and Aqr Long positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential Short position performs unexpectedly, Aqr Long 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 will offset losses from the drop in Aqr Long's long position.| Prudential Short vs. Virtus Seix Government | Prudential Short vs. Elfun Government Money | Prudential Short vs. Aig Government Money | Prudential Short vs. Us Government Securities |
| Aqr Long vs. Needham Aggressive Growth | Aqr Long vs. Alliancebernstein Global High | Aqr Long vs. Artisan High Income | Aqr Long vs. Pace High Yield |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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