Correlation Between Ab Value and Aqr Risk-balanced

Can any of the company-specific risk be diversified away by investing in both Ab Value and Aqr Risk-balanced 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 Ab Value and Aqr Risk-balanced into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ab Value Fund and Aqr Risk Balanced Modities, you can compare the effects of market volatilities on Ab Value and Aqr Risk-balanced 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 Ab Value with a short position of Aqr Risk-balanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Value and Aqr Risk-balanced.

Diversification Opportunities for Ab Value and Aqr Risk-balanced

0.57

Correlation Coefficient

Ab Value  Aqr Risk-balanced

Very weak diversification

The 3 months correlation between ABVCX and AQR is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Ab Value Fund and Aqr Risk Balanced Modities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqr Risk Balanced and Ab Value 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 Ab Value Fund are associated (or correlated) with Aqr Risk-balanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aqr Risk Balanced has no effect on the direction of Ab Value i.e., Ab Value and Aqr Risk-balanced go up and down completely randomly.

Pair Corralation between Ab Value and Aqr Risk-balanced

Assuming the 90 days horizon Ab Value is expected to generate 7.47 times less return on investment than Aqr Risk-balanced. In addition to that, Ab Value is 1.1 times more volatile than Aqr Risk Balanced Modities. It trades about 0.02 of its total potential returns per unit of risk. Aqr Risk Balanced Modities is currently generating about 0.18 per unit of volatility. If you would invest  866.00  in Aqr Risk Balanced Modities on December 27, 2024 and sell it today you would earn a total of  74.00  from holding Aqr Risk Balanced Modities or generate 8.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Ab Value Fund  vs.  Aqr Risk Balanced Modities

Ab Value Fund

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ab Value Fund are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Ab Value is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Aqr Risk Balanced

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aqr Risk Balanced Modities are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Aqr Risk-balanced may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Ab Value and Aqr Risk-balanced

The main advantage of trading using opposite Ab Value and Aqr Risk-balanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Value position performs unexpectedly, Aqr Risk-balanced 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 Risk-balanced will offset losses from the drop in Aqr Risk-balanced's long position.

The idea behind Ab Value Fund and Aqr Risk Balanced Modities pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.