Correlation Between Nationwide Destination and Aqr Sustainable

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

By analyzing existing cross correlation between Nationwide Destination 2055 and Aqr Sustainable Long Short, you can compare the effects of market volatilities on Nationwide Destination 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 Nationwide Destination with a short position of Aqr Sustainable. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nationwide Destination and Aqr Sustainable.

Diversification Opportunities for Nationwide Destination and Aqr Sustainable

-0.48

Correlation Coefficient

Nationwide Destination  Aqr Sustainable

Very good diversification

The 3 months correlation between Nationwide and Aqr is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Nationwide Destination 2055 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 Nationwide Destination 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 Nationwide Destination 2055 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 Nationwide Destination i.e., Nationwide Destination and Aqr Sustainable go up and down completely randomly.

Pair Corralation between Nationwide Destination and Aqr Sustainable

Assuming the 90 days horizon Nationwide Destination 2055 is expected to under-perform the Aqr Sustainable. In addition to that, Nationwide Destination is 2.18 times more volatile than Aqr Sustainable Long Short. It trades about -0.09 of its total potential returns per unit of risk. Aqr Sustainable Long Short is currently generating about 0.15 per unit of volatility. If you would invest  1,248  in Aqr Sustainable Long Short on October 25, 2024 and sell it today you would earn a total of  81.00  from holding Aqr Sustainable Long Short or generate 6.49% return on investment over 90 days.

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

Nationwide Destination 2055  vs.  Aqr Sustainable Long Short

Nationwide Destination

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nationwide Destination 2055 has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

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 Nationwide Destination and Aqr Sustainable

The main advantage of trading using opposite Nationwide Destination and Aqr Sustainable positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nationwide Destination 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 Nationwide Destination 2055 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.