Correlation Between Aqr Long and Prudential Government
Can any of the company-specific risk be diversified away by investing in both Aqr Long and Prudential Government 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 Aqr Long and Prudential Government into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aqr Long Short Equity and Prudential Government Income, you can compare the effects of market volatilities on Aqr Long and Prudential Government 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 Aqr Long with a short position of Prudential Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aqr Long and Prudential Government.
Diversification Opportunities for Aqr Long and Prudential Government
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Aqr and Prudential is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Aqr Long Short Equity and Prudential Government Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Government and Aqr Long 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 Aqr Long Short Equity are associated (or correlated) with Prudential Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Government has no effect on the direction of Aqr Long i.e., Aqr Long and Prudential Government go up and down completely randomly.
Pair Corralation between Aqr Long and Prudential Government
Assuming the 90 days horizon Aqr Long Short Equity is expected to generate 2.01 times more return on investment than Prudential Government. However, Aqr Long is 2.01 times more volatile than Prudential Government Income. It trades about 0.18 of its potential returns per unit of risk. Prudential Government Income is currently generating about 0.21 per unit of risk. If you would invest 1,673 in Aqr Long Short Equity on September 13, 2024 and sell it today you would earn a total of 33.00 from holding Aqr Long Short Equity or generate 1.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aqr Long Short Equity vs. Prudential Government Income
Performance |
| Timeline |
| Aqr Long Short |
| Prudential Government |
Aqr Long and Prudential Government Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aqr Long and Prudential Government
The main advantage of trading using opposite Aqr Long and Prudential Government positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aqr Long position performs unexpectedly, Prudential Government 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 Prudential Government will offset losses from the drop in Prudential Government's long position.| Aqr Long vs. Small Cap Stock | Aqr Long vs. Blackrock Sm Cap | Aqr Long vs. Fidelity Advisor Diversified | Aqr Long vs. Sentinel Small Pany |
| Prudential Government vs. Washington Mutual Investors | Prudential Government vs. Aqr Large Cap | Prudential Government vs. T Rowe Price | Prudential Government vs. Qs Large Cap |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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