Correlation Between Aqr Long-short and American Beacon
Can any of the company-specific risk be diversified away by investing in both Aqr Long-short and American Beacon 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 American Beacon 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 American Beacon Stephens, you can compare the effects of market volatilities on Aqr Long-short and American Beacon 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 American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aqr Long-short and American Beacon.
Diversification Opportunities for Aqr Long-short and American Beacon
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Aqr and American is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Aqr Long Short Equity and American Beacon Stephens in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Stephens 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 American Beacon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Beacon Stephens has no effect on the direction of Aqr Long-short i.e., Aqr Long-short and American Beacon go up and down completely randomly.
Pair Corralation between Aqr Long-short and American Beacon
Assuming the 90 days horizon Aqr Long-short is expected to generate 2.14 times less return on investment than American Beacon. But when comparing it to its historical volatility, Aqr Long Short Equity is 3.11 times less risky than American Beacon. It trades about 0.47 of its potential returns per unit of risk. American Beacon Stephens is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 1,538 in American Beacon Stephens on September 1, 2024 and sell it today you would earn a total of 155.00 from holding American Beacon Stephens or generate 10.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Aqr Long Short Equity vs. American Beacon Stephens
Performance |
| Timeline |
| Aqr Long Short |
| American Beacon Stephens |
Aqr Long-short and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aqr Long-short and American Beacon
The main advantage of trading using opposite Aqr Long-short and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aqr Long-short position performs unexpectedly, American Beacon 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 American Beacon will offset losses from the drop in American Beacon's long position.| Aqr Long-short vs. Guggenheim Risk Managed | Aqr Long-short vs. Columbia Real Estate | Aqr Long-short vs. Franklin Real Estate | Aqr Long-short vs. Deutsche Real Estate |
| American Beacon vs. American Beacon Ssi | American Beacon vs. American Beacon Bridgeway | American Beacon vs. American Beacon Bridgeway | American Beacon vs. American Beacon Twentyfour |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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