Correlation Between Gateway Fund and Aqr Managed

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

By analyzing existing cross correlation between Gateway Fund Class and Aqr Managed Futures, you can compare the effects of market volatilities on Gateway Fund and Aqr Managed 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 Gateway Fund with a short position of Aqr Managed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gateway Fund and Aqr Managed.

Diversification Opportunities for Gateway Fund and Aqr Managed

0.44

Correlation Coefficient

Gateway Fund  Aqr Managed

Very weak diversification

The 3 months correlation between Gateway and AQR is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Gateway Fund Class and Aqr Managed Futures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqr Managed Futures and Gateway Fund 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 Gateway Fund Class are associated (or correlated) with Aqr Managed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aqr Managed Futures has no effect on the direction of Gateway Fund i.e., Gateway Fund and Aqr Managed go up and down completely randomly.

Pair Corralation between Gateway Fund and Aqr Managed

Assuming the 90 days horizon Gateway Fund Class is expected to generate 0.57 times more return on investment than Aqr Managed. However, Gateway Fund Class is 1.75 times less risky than Aqr Managed. It trades about 0.21 of its potential returns per unit of risk. Aqr Managed Futures is currently generating about 0.06 per unit of risk. If you would invest  4,387  in Gateway Fund Class on September 1, 2024 and sell it today you would earn a total of  263.00  from holding Gateway Fund Class or generate 5.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Gateway Fund Class  vs.  Aqr Managed Futures

Gateway Fund Class

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Gateway Fund Class are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Gateway Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Aqr Managed Futures

Risk-Adjusted Performance

4 of 100

Insignificant

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

Pair Trading with Gateway Fund and Aqr Managed

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

The idea behind Gateway Fund Class and Aqr Managed Futures 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.