Correlation Between Pace International and Aqr Long-short
Can any of the company-specific risk be diversified away by investing in both Pace International 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 Pace International 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 Pace International Emerging and Aqr Long Short Equity, you can compare the effects of market volatilities on Pace International 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 Pace International with a short position of Aqr Long-short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pace International and Aqr Long-short.
Diversification Opportunities for Pace International and Aqr Long-short
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Pace and Aqr is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Pace International Emerging 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 Pace International 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 Pace International Emerging 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 Pace International i.e., Pace International and Aqr Long-short go up and down completely randomly.
Pair Corralation between Pace International and Aqr Long-short
Assuming the 90 days horizon Pace International Emerging is expected to generate 1.85 times more return on investment than Aqr Long-short. However, Pace International is 1.85 times more volatile than Aqr Long Short Equity. It trades about 0.07 of its potential returns per unit of risk. Aqr Long Short Equity is currently generating about 0.01 per unit of risk. If you would invest 1,345 in Pace International Emerging on December 15, 2024 and sell it today you would earn a total of 23.00 from holding Pace International Emerging or generate 1.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pace International Emerging vs. Aqr Long Short Equity
Performance |
| Timeline |
| Pace International |
| Aqr Long Short |
Pace International and Aqr Long-short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pace International and Aqr Long-short
The main advantage of trading using opposite Pace International and Aqr Long-short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pace International 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.| Pace International vs. Upright Assets Allocation | ||
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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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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