Correlation Between Microsoft and Aqr Long-short
Can any of the company-specific risk be diversified away by investing in both Microsoft 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 Microsoft 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 Microsoft and Aqr Long Short Equity, you can compare the effects of market volatilities on Microsoft 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 Microsoft with a short position of Aqr Long-short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Aqr Long-short.
Diversification Opportunities for Microsoft and Aqr Long-short
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Microsoft and Aqr is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft 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 Microsoft 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 Microsoft 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 Microsoft i.e., Microsoft and Aqr Long-short go up and down completely randomly.
Pair Corralation between Microsoft and Aqr Long-short
Given the investment horizon of 90 days Microsoft is expected to under-perform the Aqr Long-short. In addition to that, Microsoft is 3.72 times more volatile than Aqr Long Short Equity. It trades about -0.04 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 1,613 in Aqr Long Short Equity on August 25, 2024 and sell it today you would earn a total of 77.00 from holding Aqr Long Short Equity or generate 4.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Aqr Long Short Equity
Performance |
| Timeline |
| Microsoft |
| Aqr Long Short |
Microsoft and Aqr Long-short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Aqr Long-short
The main advantage of trading using opposite Microsoft and Aqr Long-short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft 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.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Aqr Long-short vs. Aqr Large Cap | Aqr Long-short vs. Aqr Large Cap | Aqr Long-short vs. Aqr International Defensive | Aqr Long-short 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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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