Correlation Between Aqr Sustainable and Municipal Bond
Can any of the company-specific risk be diversified away by investing in both Aqr Sustainable and Municipal Bond 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 Sustainable and Municipal Bond into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aqr Sustainable Long Short and Municipal Bond Fund, you can compare the effects of market volatilities on Aqr Sustainable and Municipal Bond 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 Sustainable with a short position of Municipal Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aqr Sustainable and Municipal Bond.
Diversification Opportunities for Aqr Sustainable and Municipal Bond
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between AQR and Municipal is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Aqr Sustainable Long Short and Municipal Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Municipal Bond and Aqr Sustainable 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 Sustainable Long Short are associated (or correlated) with Municipal Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Municipal Bond has no effect on the direction of Aqr Sustainable i.e., Aqr Sustainable and Municipal Bond go up and down completely randomly.
Pair Corralation between Aqr Sustainable and Municipal Bond
Assuming the 90 days horizon Aqr Sustainable Long Short is expected to generate 3.08 times more return on investment than Municipal Bond. However, Aqr Sustainable is 3.08 times more volatile than Municipal Bond Fund. It trades about 0.15 of its potential returns per unit of risk. Municipal Bond Fund is currently generating about 0.09 per unit of risk. If you would invest 1,240 in Aqr Sustainable Long Short on September 1, 2024 and sell it today you would earn a total of 253.00 from holding Aqr Sustainable Long Short or generate 20.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aqr Sustainable Long Short vs. Municipal Bond Fund
Performance |
| Timeline |
| Aqr Sustainable Long |
| Municipal Bond |
Aqr Sustainable and Municipal Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aqr Sustainable and Municipal Bond
The main advantage of trading using opposite Aqr Sustainable and Municipal Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aqr Sustainable position performs unexpectedly, Municipal Bond 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 Municipal Bond will offset losses from the drop in Municipal Bond's long position.| Aqr Sustainable vs. Aqr Large Cap | Aqr Sustainable vs. Aqr Large Cap | Aqr Sustainable vs. Aqr International Defensive | Aqr Sustainable vs. Aqr International Defensive |
| Municipal Bond vs. Old Westbury Short Term | Municipal Bond vs. Quantitative Longshort Equity | Municipal Bond vs. Aqr Sustainable Long Short | Municipal Bond vs. Astor Longshort 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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