Correlation Between Columbia High and Aqr Long-short

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

By analyzing existing cross correlation between Columbia High Yield and Aqr Long Short Equity, you can compare the effects of market volatilities on Columbia High and Aqr Long-short 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 Columbia High with a short position of Aqr Long-short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Columbia High and Aqr Long-short.

Diversification Opportunities for Columbia High and Aqr Long-short

0.73

Correlation Coefficient

Columbia High  Aqr Long-short

Poor diversification

The 3 months correlation between Columbia and Aqr is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Columbia High Yield and Aqr Long Short Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqr Long Short and Columbia High 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 Columbia High Yield are associated (or correlated) with Aqr Long-short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aqr Long Short has no effect on the direction of Columbia High i.e., Columbia High and Aqr Long-short go up and down completely randomly.

Pair Corralation between Columbia High and Aqr Long-short

Assuming the 90 days horizon Columbia High is expected to generate 12.72 times less return on investment than Aqr Long-short. But when comparing it to its historical volatility, Columbia High Yield is 2.6 times less risky than Aqr Long-short. It trades about 0.06 of its potential returns per unit of risk. Aqr Long Short Equity is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  1,548  in Aqr Long Short Equity on December 3, 2024 and sell it today you would earn a total of  134.00  from holding Aqr Long Short Equity or generate 8.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

Columbia High Yield  vs.  Aqr Long Short Equity

Columbia High Yield

Risk-Adjusted Performance

Modest

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

Aqr Long Short

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Aqr Long Short Equity are ranked lower than 22 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Aqr Long-short may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Columbia High and Aqr Long-short

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

The idea behind Columbia High Yield and Aqr Long Short Equity 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.