Correlation Between Aqr Global and Great West

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

By analyzing existing cross correlation between Aqr Global Macro and Great West Short Duration, you can compare the effects of market volatilities on Aqr Global and Great West 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 Global with a short position of Great West. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aqr Global and Great West.

Diversification Opportunities for Aqr Global and Great West

0.94

Correlation Coefficient

Aqr Global  Great West

Almost no diversification

The 3 months correlation between Aqr and Great is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Aqr Global Macro and Great West Short Duration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great West Short and Aqr Global 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 Global Macro are associated (or correlated) with Great West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great West Short has no effect on the direction of Aqr Global i.e., Aqr Global and Great West go up and down completely randomly.

Pair Corralation between Aqr Global and Great West

Assuming the 90 days horizon Aqr Global Macro is expected to generate 5.12 times more return on investment than Great West. However, Aqr Global is 5.12 times more volatile than Great West Short Duration. It trades about 0.33 of its potential returns per unit of risk. Great West Short Duration is currently generating about 0.34 per unit of risk. If you would invest  932.00  in Aqr Global Macro on December 21, 2024 and sell it today you would earn a total of  89.00  from holding Aqr Global Macro or generate 9.55% return on investment over 90 days.

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

Aqr Global Macro  vs.  Great West Short Duration

Aqr Global Macro

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Aqr Global Macro are ranked lower than 25 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Aqr Global may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Great West Short

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Great West Short Duration are ranked lower than 26 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Great West 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 Global and Great West

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

The idea behind Aqr Global Macro and Great West Short Duration 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .