Correlation Between Aqr Diversified and Nationwide Destination

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

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

Diversification Opportunities for Aqr Diversified and Nationwide Destination

-0.15

Correlation Coefficient

Aqr Diversified  Nationwide Destination

Good diversification

The 3 months correlation between Aqr and Nationwide is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Aqr Diversified Arbitrage and Nationwide Destination 2055 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nationwide Destination and Aqr Diversified 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 Aqr Diversified Arbitrage are associated (or correlated) with Nationwide Destination. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nationwide Destination has no effect on the direction of Aqr Diversified i.e., Aqr Diversified and Nationwide Destination go up and down completely randomly.

Pair Corralation between Aqr Diversified and Nationwide Destination

Assuming the 90 days horizon Aqr Diversified Arbitrage is expected to under-perform the Nationwide Destination. But the mutual fund apears to be less risky and, when comparing its historical volatility, Aqr Diversified Arbitrage is 4.15 times less risky than Nationwide Destination. The mutual fund trades about -0.09 of its potential returns per unit of risk. The Nationwide Destination 2055 is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  1,491  in Nationwide Destination 2055 on September 2, 2024 and sell it today you would earn a total of  92.00  from holding Nationwide Destination 2055 or generate 6.17% return on investment over 90 days.

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

Aqr Diversified Arbitrage  vs.  Nationwide Destination 2055

Aqr Diversified Arbitrage

Risk-Adjusted Performance

0 of 100

Very Weak

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

Nationwide Destination

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nationwide Destination 2055 are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Nationwide Destination is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Aqr Diversified and Nationwide Destination

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

The idea behind Aqr Diversified Arbitrage and Nationwide Destination 2055 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.

Check out your portfolio center.

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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.