Correlation Between Blackrock Alternative and Aqr Style

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

By analyzing existing cross correlation between Blackrock Alternative Capital and Aqr Style Premia, you can compare the effects of market volatilities on Blackrock Alternative and Aqr Style 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 Blackrock Alternative with a short position of Aqr Style. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackrock Alternative and Aqr Style.

Diversification Opportunities for Blackrock Alternative and Aqr Style

-0.28

Correlation Coefficient

Blackrock Alternative  Aqr Style

Very good diversification

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

Pair Corralation between Blackrock Alternative and Aqr Style

Assuming the 90 days horizon Blackrock Alternative Capital is expected to generate 0.36 times more return on investment than Aqr Style. However, Blackrock Alternative Capital is 2.76 times less risky than Aqr Style. It trades about 0.06 of its potential returns per unit of risk. Aqr Style Premia is currently generating about -0.02 per unit of risk. If you would invest  1,061  in Blackrock Alternative Capital on September 2, 2024 and sell it today you would earn a total of  9.00  from holding Blackrock Alternative Capital or generate 0.85% return on investment over 90 days.

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

Blackrock Alternative Capital  vs.  Aqr Style Premia

Blackrock Alternative

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Alternative Capital are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental drivers, Blackrock Alternative is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Aqr Style Premia

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Blackrock Alternative and Aqr Style

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

The idea behind Blackrock Alternative Capital and Aqr Style Premia 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.