Correlation Between Aqr Risk and Goldman Sachs

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

By analyzing existing cross correlation between Aqr Risk Parity and Goldman Sachs High, you can compare the effects of market volatilities on Aqr Risk and Goldman Sachs 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 Risk with a short position of Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aqr Risk and Goldman Sachs.

Diversification Opportunities for Aqr Risk and Goldman Sachs

0.28

Correlation Coefficient

Aqr Risk  Goldman Sachs

Modest diversification

The 3 months correlation between Aqr and Goldman is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Aqr Risk Parity and Goldman Sachs High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs High and Aqr Risk 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 Risk Parity are associated (or correlated) with Goldman Sachs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goldman Sachs High has no effect on the direction of Aqr Risk i.e., Aqr Risk and Goldman Sachs go up and down completely randomly.

Pair Corralation between Aqr Risk and Goldman Sachs

Assuming the 90 days horizon Aqr Risk Parity is expected to under-perform the Goldman Sachs. In addition to that, Aqr Risk is 14.11 times more volatile than Goldman Sachs High. It trades about -0.06 of its total potential returns per unit of risk. Goldman Sachs High is currently generating about -0.06 per unit of volatility. If you would invest  889.00  in Goldman Sachs High on October 8, 2024 and sell it today you would lose (1.00) from holding Goldman Sachs High or give up 0.11% of portfolio value over 90 days.

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

Aqr Risk Parity  vs.  Goldman Sachs High

Aqr Risk Parity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aqr Risk Parity has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Aqr Risk is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Goldman Sachs High

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs High are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Goldman Sachs is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Aqr Risk and Goldman Sachs

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

The idea behind Aqr Risk Parity and Goldman Sachs High 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.

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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.