Correlation Between Aqr Long-short and New Economy
Can any of the company-specific risk be diversified away by investing in both Aqr Long-short and New Economy 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 New Economy 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 New Economy Fund, you can compare the effects of market volatilities on Aqr Long-short and New Economy 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 New Economy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aqr Long-short and New Economy.
Diversification Opportunities for Aqr Long-short and New Economy
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Aqr and New is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Aqr Long Short Equity and New Economy Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Economy Fund 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 New Economy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Economy Fund has no effect on the direction of Aqr Long-short i.e., Aqr Long-short and New Economy go up and down completely randomly.
Pair Corralation between Aqr Long-short and New Economy
Assuming the 90 days horizon Aqr Long-short is expected to generate 1.28 times less return on investment than New Economy. But when comparing it to its historical volatility, Aqr Long Short Equity is 2.21 times less risky than New Economy. It trades about 0.38 of its potential returns per unit of risk. New Economy Fund is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 6,308 in New Economy Fund on November 9, 2024 and sell it today you would earn a total of 292.00 from holding New Economy Fund or generate 4.63% 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. New Economy Fund
Performance |
| Timeline |
| Aqr Long Short |
| New Economy Fund |
Aqr Long-short and New Economy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aqr Long-short and New Economy
The main advantage of trading using opposite Aqr Long-short and New Economy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aqr Long-short position performs unexpectedly, New Economy 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 New Economy will offset losses from the drop in New Economy's long position.| Aqr Long-short vs. Gmo High Yield | Aqr Long-short vs. The Hartford High | Aqr Long-short vs. Pace High Yield | Aqr Long-short vs. Penn Capital Opportunistic |
| New Economy vs. Sierra E Retirement | New Economy vs. Dimensional Retirement Income | New Economy vs. Tiaa Cref Lifestyle Moderate | New Economy vs. Tiaa Cref Lifecycle Retirement |
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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