Correlation Between Aqr Global and Ultramid Cap

Can any of the company-specific risk be diversified away by investing in both Aqr Global and Ultramid Cap 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 Ultramid Cap 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 Ultramid Cap Profund Ultramid Cap, you can compare the effects of market volatilities on Aqr Global and Ultramid Cap 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 Ultramid Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aqr Global and Ultramid Cap.

Diversification Opportunities for Aqr Global and Ultramid Cap

-0.77

Correlation Coefficient

Aqr Global  Ultramid Cap

Pay attention - limited upside

The 3 months correlation between Aqr and Ultramid is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Aqr Global Macro and Ultramid Cap Profund Ultramid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ultramid Cap Profund 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 Ultramid Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ultramid Cap Profund has no effect on the direction of Aqr Global i.e., Aqr Global and Ultramid Cap go up and down completely randomly.

Pair Corralation between Aqr Global and Ultramid Cap

Assuming the 90 days horizon Aqr Global Macro is expected to generate 0.23 times more return on investment than Ultramid Cap. However, Aqr Global Macro is 4.38 times less risky than Ultramid Cap. It trades about 0.32 of its potential returns per unit of risk. Ultramid Cap Profund Ultramid Cap is currently generating about -0.1 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  88.00  from holding Aqr Global Macro or generate 9.44% return on investment over 90 days.

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

Aqr Global Macro  vs.  Ultramid Cap Profund Ultramid

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.

Ultramid Cap Profund

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ultramid Cap Profund Ultramid Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's forward indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Aqr Global and Ultramid Cap

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

The idea behind Aqr Global Macro and Ultramid Cap Profund Ultramid Cap 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .