Correlation Between Aqr Long-short and Absolute Convertible
Can any of the company-specific risk be diversified away by investing in both Aqr Long-short and Absolute Convertible 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-short and Absolute Convertible 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 Absolute Convertible Arbitrage, you can compare the effects of market volatilities on Aqr Long-short and Absolute Convertible 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-short with a short position of Absolute Convertible. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aqr Long-short and Absolute Convertible.
Diversification Opportunities for Aqr Long-short and Absolute Convertible
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Aqr and Absolute is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Aqr Long Short Equity and Absolute Convertible Arbitrage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Absolute Convertible and Aqr Long-short 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 Absolute Convertible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Absolute Convertible has no effect on the direction of Aqr Long-short i.e., Aqr Long-short and Absolute Convertible go up and down completely randomly.
Pair Corralation between Aqr Long-short and Absolute Convertible
Assuming the 90 days horizon Aqr Long Short Equity is expected to generate 9.93 times more return on investment than Absolute Convertible. However, Aqr Long-short is 9.93 times more volatile than Absolute Convertible Arbitrage. It trades about 0.09 of its potential returns per unit of risk. Absolute Convertible Arbitrage is currently generating about 0.61 per unit of risk. If you would invest 1,550 in Aqr Long Short Equity on August 24, 2024 and sell it today you would earn a total of 90.00 from holding Aqr Long Short Equity or generate 5.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aqr Long Short Equity vs. Absolute Convertible Arbitrage
Performance |
| Timeline |
| Aqr Long Short |
| Absolute Convertible |
Aqr Long-short and Absolute Convertible Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aqr Long-short and Absolute Convertible
The main advantage of trading using opposite Aqr Long-short and Absolute Convertible positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aqr Long-short position performs unexpectedly, Absolute Convertible 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 Absolute Convertible will offset losses from the drop in Absolute Convertible's long position.| Aqr Long-short vs. Ultra Short Fixed Income | Aqr Long-short vs. Touchstone Ultra Short | Aqr Long-short vs. Quantitative Longshort Equity | Aqr Long-short vs. Old Westbury Short Term |
| Absolute Convertible vs. Ab Select Longshort | Absolute Convertible vs. Locorr Longshort Modities | Absolute Convertible vs. Maryland Short Term Tax Free | Absolute Convertible vs. Aqr Long Short Equity |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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