Correlation Between Aqr Long and Multi Index

Can any of the company-specific risk be diversified away by investing in both Aqr Long and Multi Index 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 Multi Index 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 Multi Index 2015 Lifetime, you can compare the effects of market volatilities on Aqr Long and Multi Index 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 Multi Index. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aqr Long and Multi Index.

Diversification Opportunities for Aqr Long and Multi Index

0.27

Correlation Coefficient

Aqr Long  Multi Index

Modest diversification

The 3 months correlation between Aqr and Multi is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Aqr Long Short Equity and Multi Index 2015 Lifetime in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multi Index 2015 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 Multi Index. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multi Index 2015 has no effect on the direction of Aqr Long i.e., Aqr Long and Multi Index go up and down completely randomly.

Pair Corralation between Aqr Long and Multi Index

Assuming the 90 days horizon Aqr Long Short Equity is expected to generate 1.46 times more return on investment than Multi Index. However, Aqr Long is 1.46 times more volatile than Multi Index 2015 Lifetime. It trades about 0.14 of its potential returns per unit of risk. Multi Index 2015 Lifetime is currently generating about 0.08 per unit of risk. If you would invest  1,037  in Aqr Long Short Equity on September 20, 2024 and sell it today you would earn a total of  530.00  from holding Aqr Long Short Equity or generate 51.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

Aqr Long Short Equity  vs.  Multi Index 2015 Lifetime

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.

Multi Index 2015

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Multi Index 2015 Lifetime has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward-looking signals, Multi Index 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 Multi Index

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

The idea behind Aqr Long Short Equity and Multi Index 2015 Lifetime 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.