Correlation Between Payden Regal and Aqr Sustainable
Can any of the company-specific risk be diversified away by investing in both Payden Regal and Aqr Sustainable 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 Payden Regal and Aqr Sustainable into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Payden Regal and Aqr Sustainable Long Short, you can compare the effects of market volatilities on Payden Regal and Aqr Sustainable 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 Payden Regal with a short position of Aqr Sustainable. Check out your portfolio center. Please also check ongoing floating volatility patterns of Payden Regal and Aqr Sustainable.
Diversification Opportunities for Payden Regal and Aqr Sustainable
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Payden and Aqr is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding The Payden Regal and Aqr Sustainable Long Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqr Sustainable Long and Payden Regal 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 The Payden Regal are associated (or correlated) with Aqr Sustainable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aqr Sustainable Long has no effect on the direction of Payden Regal i.e., Payden Regal and Aqr Sustainable go up and down completely randomly.
Pair Corralation between Payden Regal and Aqr Sustainable
Assuming the 90 days horizon Payden Regal is expected to generate 626.5 times less return on investment than Aqr Sustainable. But when comparing it to its historical volatility, The Payden Regal is 3.88 times less risky than Aqr Sustainable. It trades about 0.0 of its potential returns per unit of risk. Aqr Sustainable Long Short is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 1,342 in Aqr Sustainable Long Short on December 1, 2024 and sell it today you would earn a total of 35.00 from holding Aqr Sustainable Long Short or generate 2.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Payden Regal vs. Aqr Sustainable Long Short
Performance |
| Timeline |
| Payden Regal |
| Aqr Sustainable Long |
Payden Regal and Aqr Sustainable Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Payden Regal and Aqr Sustainable
The main advantage of trading using opposite Payden Regal and Aqr Sustainable positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Payden Regal position performs unexpectedly, Aqr Sustainable 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 Sustainable will offset losses from the drop in Aqr Sustainable's long position.| Payden Regal vs. Hartford Moderate Allocation | Payden Regal vs. Franklin Moderate Allocation | Payden Regal vs. Blackrock Retirement Income | Payden Regal vs. Dimensional Retirement Income |
| Aqr Sustainable vs. Financials Ultrasector Profund | Aqr Sustainable vs. Blackrock Financial Institutions | Aqr Sustainable vs. Mesirow Financial Small | Aqr Sustainable vs. Fidelity Advisor Financial |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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