Correlation Between Principal Lifetime and Aqr Long-short
Can any of the company-specific risk be diversified away by investing in both Principal Lifetime 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 Principal Lifetime 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 Principal Lifetime Hybrid and Aqr Long Short Equity, you can compare the effects of market volatilities on Principal Lifetime 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 Principal Lifetime with a short position of Aqr Long-short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Principal Lifetime and Aqr Long-short.
Diversification Opportunities for Principal Lifetime and Aqr Long-short
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between PRINCIPAL and Aqr is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Principal Lifetime Hybrid 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 Principal Lifetime 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 Principal Lifetime Hybrid 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 Principal Lifetime i.e., Principal Lifetime and Aqr Long-short go up and down completely randomly.
Pair Corralation between Principal Lifetime and Aqr Long-short
Assuming the 90 days horizon Principal Lifetime is expected to generate 2.47 times less return on investment than Aqr Long-short. In addition to that, Principal Lifetime is 1.04 times more volatile than Aqr Long Short Equity. It trades about 0.08 of its total potential returns per unit of risk. Aqr Long Short Equity is currently generating about 0.19 per unit of volatility. If you would invest 1,001 in Aqr Long Short Equity on October 30, 2024 and sell it today you would earn a total of 609.00 from holding Aqr Long Short Equity or generate 60.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Principal Lifetime Hybrid vs. Aqr Long Short Equity
Performance |
| Timeline |
| Principal Lifetime Hybrid |
| Aqr Long Short |
Principal Lifetime and Aqr Long-short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Principal Lifetime and Aqr Long-short
The main advantage of trading using opposite Principal Lifetime and Aqr Long-short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Principal Lifetime 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.| Principal Lifetime vs. Strategic Asset Management | Principal Lifetime vs. Strategic Asset Management | Principal Lifetime vs. International Equity Index | Principal Lifetime vs. Strategic Asset Management |
| Aqr Long-short vs. Ashmore Emerging Markets | Aqr Long-short vs. Dreyfus Bond Market | Aqr Long-short vs. Inverse Emerging Markets | Aqr Long-short vs. Locorr Market Trend |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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