Correlation Between Aqr Long and Hennessy Gas
Can any of the company-specific risk be diversified away by investing in both Aqr Long and Hennessy Gas 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 Hennessy Gas 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 Hennessy Gas Utility, you can compare the effects of market volatilities on Aqr Long and Hennessy Gas 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 Hennessy Gas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aqr Long and Hennessy Gas.
Diversification Opportunities for Aqr Long and Hennessy Gas
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Aqr and Hennessy is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Aqr Long Short Equity and Hennessy Gas Utility in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hennessy Gas Utility 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 Hennessy Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hennessy Gas Utility has no effect on the direction of Aqr Long i.e., Aqr Long and Hennessy Gas go up and down completely randomly.
Pair Corralation between Aqr Long and Hennessy Gas
Assuming the 90 days horizon Aqr Long Short Equity is expected to generate 0.57 times more return on investment than Hennessy Gas. However, Aqr Long Short Equity is 1.74 times less risky than Hennessy Gas. It trades about 0.19 of its potential returns per unit of risk. Hennessy Gas Utility is currently generating about 0.06 per unit of risk. If you would invest 1,048 in Aqr Long Short Equity on September 3, 2024 and sell it today you would earn a total of 602.00 from holding Aqr Long Short Equity or generate 57.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aqr Long Short Equity vs. Hennessy Gas Utility
Performance |
| Timeline |
| Aqr Long Short |
| Hennessy Gas Utility |
Aqr Long and Hennessy Gas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aqr Long and Hennessy Gas
The main advantage of trading using opposite Aqr Long and Hennessy Gas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aqr Long position performs unexpectedly, Hennessy Gas 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 Hennessy Gas will offset losses from the drop in Hennessy Gas' long position.| Aqr Long vs. T Rowe Price | Aqr Long vs. Vanguard California Long Term | Aqr Long vs. Transamerica Funds | Aqr Long vs. Nuveen Minnesota Municipal |
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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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