Correlation Between Kinetics Market and Aqr Sustainable

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

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

Diversification Opportunities for Kinetics Market and Aqr Sustainable

0.39

Correlation Coefficient

Kinetics Market  Aqr Sustainable

Weak diversification

The 3 months correlation between Kinetics and Aqr is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Market Opportunities and Aqr Sustainable Long Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqr Sustainable Long and Kinetics Market 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 Kinetics Market Opportunities are associated (or correlated) with Aqr Sustainable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aqr Sustainable Long has no effect on the direction of Kinetics Market i.e., Kinetics Market and Aqr Sustainable go up and down completely randomly.

Pair Corralation between Kinetics Market and Aqr Sustainable

Assuming the 90 days horizon Kinetics Market Opportunities is expected to generate 3.02 times more return on investment than Aqr Sustainable. However, Kinetics Market is 3.02 times more volatile than Aqr Sustainable Long Short. It trades about 0.45 of its potential returns per unit of risk. Aqr Sustainable Long Short is currently generating about -0.04 per unit of risk. If you would invest  7,404  in Kinetics Market Opportunities on October 25, 2024 and sell it today you would earn a total of  1,008  from holding Kinetics Market Opportunities or generate 13.61% return on investment over 90 days.

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

Kinetics Market Opportunities  vs.  Aqr Sustainable Long Short

Kinetics Market Oppo

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kinetics Market Opportunities are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Kinetics Market showed solid returns over the last few months and may actually be approaching a breakup point.

Aqr Sustainable Long

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aqr Sustainable Long Short are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Aqr Sustainable may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Kinetics Market and Aqr Sustainable

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

The idea behind Kinetics Market Opportunities and Aqr Sustainable Long Short 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.