Correlation Between Western Asset and Aqr Sustainable
Can any of the company-specific risk be diversified away by investing in both Western Asset and Aqr Sustainable 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 Western Asset and Aqr Sustainable into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset E and Aqr Sustainable Long Short, you can compare the effects of market volatilities on Western Asset and Aqr Sustainable 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 Western Asset with a short position of Aqr Sustainable. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Aqr Sustainable.
Diversification Opportunities for Western Asset and Aqr Sustainable
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Western and AQR is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset E and Aqr Sustainable Long Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqr Sustainable Long and Western Asset 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 Western Asset E are associated (or correlated) with Aqr Sustainable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aqr Sustainable Long has no effect on the direction of Western Asset i.e., Western Asset and Aqr Sustainable go up and down completely randomly.
Pair Corralation between Western Asset and Aqr Sustainable
Assuming the 90 days horizon Western Asset is expected to generate 4.79 times less return on investment than Aqr Sustainable. But when comparing it to its historical volatility, Western Asset E is 2.01 times less risky than Aqr Sustainable. It trades about 0.11 of its potential returns per unit of risk. Aqr Sustainable Long Short is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 1,428 in Aqr Sustainable Long Short on September 1, 2024 and sell it today you would earn a total of 65.00 from holding Aqr Sustainable Long Short or generate 4.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Western Asset E vs. Aqr Sustainable Long Short
Performance |
| Timeline |
| Western Asset E |
| Aqr Sustainable Long |
Western Asset and Aqr Sustainable Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Aqr Sustainable
The main advantage of trading using opposite Western Asset and Aqr Sustainable positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Aqr Sustainable 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 Aqr Sustainable will offset losses from the drop in Aqr Sustainable's long position.| Western Asset vs. Aqr Sustainable Long Short | Western Asset vs. Franklin Federal Limited Term | Western Asset vs. Siit Ultra Short | Western Asset vs. Touchstone Ultra Short |
| Aqr Sustainable vs. Aqr Large Cap | Aqr Sustainable vs. Aqr Large Cap | Aqr Sustainable vs. Aqr International Defensive | Aqr Sustainable vs. Aqr International Defensive |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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