Correlation Between New World and Aqr Managed
Can any of the company-specific risk be diversified away by investing in both New World and Aqr Managed 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 New World and Aqr Managed into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New World Fund and Aqr Managed Futures, you can compare the effects of market volatilities on New World and Aqr Managed 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 New World with a short position of Aqr Managed. Check out your portfolio center. Please also check ongoing floating volatility patterns of New World and Aqr Managed.
Diversification Opportunities for New World and Aqr Managed
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between New and AQR is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding New World Fund and Aqr Managed Futures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqr Managed Futures and New World 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 New World Fund are associated (or correlated) with Aqr Managed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aqr Managed Futures has no effect on the direction of New World i.e., New World and Aqr Managed go up and down completely randomly.
Pair Corralation between New World and Aqr Managed
Assuming the 90 days horizon New World Fund is expected to under-perform the Aqr Managed. But the mutual fund apears to be less risky and, when comparing its historical volatility, New World Fund is 1.39 times less risky than Aqr Managed. The mutual fund trades about -0.13 of its potential returns per unit of risk. The Aqr Managed Futures is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 798.00 in Aqr Managed Futures on September 2, 2024 and sell it today you would earn a total of 19.00 from holding Aqr Managed Futures or generate 2.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
New World Fund vs. Aqr Managed Futures
Performance |
| Timeline |
| New World Fund |
| Aqr Managed Futures |
New World and Aqr Managed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New World and Aqr Managed
The main advantage of trading using opposite New World and Aqr Managed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New World position performs unexpectedly, Aqr Managed 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 Managed will offset losses from the drop in Aqr Managed's long position.| New World vs. Aqr Managed Futures | New World vs. Ab Bond Inflation | New World vs. Aqr Managed Futures | New World vs. Fidelity Advisor 529 |
| Aqr Managed vs. Aqr Large Cap | Aqr Managed vs. Aqr Large Cap | Aqr Managed vs. Aqr International Defensive | Aqr Managed 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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