Correlation Between Aqr Long and Diversified Bond

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

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

Diversification Opportunities for Aqr Long and Diversified Bond

-0.14

Correlation Coefficient

Aqr Long  Diversified Bond

Good diversification

The 3 months correlation between Aqr and Diversified is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Aqr Long Short Equity and Diversified Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diversified Bond and Aqr Long 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 Long Short Equity are associated (or correlated) with Diversified Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diversified Bond has no effect on the direction of Aqr Long i.e., Aqr Long and Diversified Bond go up and down completely randomly.

Pair Corralation between Aqr Long and Diversified Bond

Assuming the 90 days horizon Aqr Long Short Equity is expected to generate 2.59 times more return on investment than Diversified Bond. However, Aqr Long is 2.59 times more volatile than Diversified Bond Fund. It trades about 0.01 of its potential returns per unit of risk. Diversified Bond Fund is currently generating about 0.0 per unit of risk. If you would invest  1,551  in Aqr Long Short Equity on October 4, 2024 and sell it today you would earn a total of  8.00  from holding Aqr Long Short Equity or generate 0.52% return on investment over 90 days.

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

Aqr Long Short Equity  vs.  Diversified Bond Fund

Aqr Long Short

Risk-Adjusted Performance

0 of 100

Very Weak

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

Diversified Bond

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Diversified Bond Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Diversified Bond 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 Long and Diversified Bond

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

The idea behind Aqr Long Short Equity and Diversified Bond Fund 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.