Correlation Between Aqr Long and Fa 529

Can any of the company-specific risk be diversified away by investing in both Aqr Long and Fa 529 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 Fa 529 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 Fa 529 Aggressive, you can compare the effects of market volatilities on Aqr Long and Fa 529 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 Fa 529. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aqr Long and Fa 529.

Diversification Opportunities for Aqr Long and Fa 529

0.61

Correlation Coefficient

Aqr Long  Fa 529

Poor diversification

The 3 months correlation between Aqr and FFCGX is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Aqr Long Short Equity and Fa 529 Aggressive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fa 529 Aggressive 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 Fa 529. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fa 529 Aggressive has no effect on the direction of Aqr Long i.e., Aqr Long and Fa 529 go up and down completely randomly.

Pair Corralation between Aqr Long and Fa 529

Assuming the 90 days horizon Aqr Long Short Equity is expected to under-perform the Fa 529. In addition to that, Aqr Long is 2.3 times more volatile than Fa 529 Aggressive. It trades about -0.14 of its total potential returns per unit of risk. Fa 529 Aggressive is currently generating about -0.18 per unit of volatility. If you would invest  4,062  in Fa 529 Aggressive on October 1, 2024 and sell it today you would lose (113.00) from holding Fa 529 Aggressive or give up 2.78% of portfolio value over 90 days.

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

Aqr Long Short Equity  vs.  Fa 529 Aggressive

Aqr Long Short

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Aqr Long Short Equity are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. 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.

Fa 529 Aggressive

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fa 529 Aggressive has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Fa 529 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 Fa 529

The main advantage of trading using opposite Aqr Long and Fa 529 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aqr Long position performs unexpectedly, Fa 529 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 Fa 529 will offset losses from the drop in Fa 529's long position.

The idea behind Aqr Long Short Equity and Fa 529 Aggressive 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.