Correlation Between Aqr Risk-balanced and Global Hard

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

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

Diversification Opportunities for Aqr Risk-balanced and Global Hard

0.89

Correlation Coefficient

Aqr Risk-balanced  Global Hard

Very poor diversification

The 3 months correlation between Aqr and GLOBAL is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Aqr Risk Balanced Modities and Global Hard Assets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Hard Assets and Aqr Risk-balanced 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 Balanced Modities are associated (or correlated) with Global Hard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Hard Assets has no effect on the direction of Aqr Risk-balanced i.e., Aqr Risk-balanced and Global Hard go up and down completely randomly.

Pair Corralation between Aqr Risk-balanced and Global Hard

Assuming the 90 days horizon Aqr Risk Balanced Modities is expected to under-perform the Global Hard. In addition to that, Aqr Risk-balanced is 1.09 times more volatile than Global Hard Assets. It trades about -0.02 of its total potential returns per unit of risk. Global Hard Assets is currently generating about 0.08 per unit of volatility. If you would invest  4,035  in Global Hard Assets on September 5, 2024 and sell it today you would earn a total of  52.00  from holding Global Hard Assets or generate 1.29% return on investment over 90 days.

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

Aqr Risk Balanced Modities  vs.  Global Hard Assets

Aqr Risk Balanced

Risk-Adjusted Performance

8 of 100

OK

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

Global Hard Assets

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Global Hard Assets are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Global Hard 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-balanced and Global Hard

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

The idea behind Aqr Risk Balanced Modities and Global Hard Assets 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.