Correlation Between Aqr Managed and Energy Services
Can any of the company-specific risk be diversified away by investing in both Aqr Managed and Energy Services 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 Managed and Energy Services into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aqr Managed Futures and Energy Services Fund, you can compare the effects of market volatilities on Aqr Managed and Energy Services 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 Managed with a short position of Energy Services. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aqr Managed and Energy Services.
Diversification Opportunities for Aqr Managed and Energy Services
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Aqr and Energy is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Aqr Managed Futures and Energy Services Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energy Services and Aqr Managed 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 Managed Futures are associated (or correlated) with Energy Services. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energy Services has no effect on the direction of Aqr Managed i.e., Aqr Managed and Energy Services go up and down completely randomly.
Pair Corralation between Aqr Managed and Energy Services
Assuming the 90 days horizon Aqr Managed Futures is expected to under-perform the Energy Services. But the mutual fund apears to be less risky and, when comparing its historical volatility, Aqr Managed Futures is 1.3 times less risky than Energy Services. The mutual fund trades about -0.01 of its potential returns per unit of risk. The Energy Services Fund is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 20,738 in Energy Services Fund on November 2, 2024 and sell it today you would earn a total of 150.00 from holding Energy Services Fund or generate 0.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aqr Managed Futures vs. Energy Services Fund
Performance |
| Timeline |
| Aqr Managed Futures |
| Energy Services |
Aqr Managed and Energy Services Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aqr Managed and Energy Services
The main advantage of trading using opposite Aqr Managed and Energy Services positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aqr Managed position performs unexpectedly, Energy Services 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 Energy Services will offset losses from the drop in Energy Services' long position.| Aqr Managed vs. Blackrock Moderate Prepared | Aqr Managed vs. Blackrock Retirement Income | Aqr Managed vs. Retirement Living Through | Aqr Managed vs. College Retirement Equities |
| Energy Services vs. Energy Fund Investor | Energy Services vs. Basic Materials Fund | Energy Services vs. Electronics Fund Investor | Energy Services vs. Health Care Fund |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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