Correlation Between Aqr Long and Europe 125x

Can any of the company-specific risk be diversified away by investing in both Aqr Long and Europe 125x 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 Europe 125x 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 Europe 125x Strategy, you can compare the effects of market volatilities on Aqr Long and Europe 125x 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 Europe 125x. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aqr Long and Europe 125x.

Diversification Opportunities for Aqr Long and Europe 125x

-0.81

Correlation Coefficient

Aqr Long  Europe 125x

Pay attention - limited upside

The 3 months correlation between Aqr and Europe is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Aqr Long Short Equity and Europe 125x Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Europe 125x Strategy 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 Europe 125x. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Europe 125x Strategy has no effect on the direction of Aqr Long i.e., Aqr Long and Europe 125x go up and down completely randomly.

Pair Corralation between Aqr Long and Europe 125x

Assuming the 90 days horizon Aqr Long Short Equity is expected to generate 0.46 times more return on investment than Europe 125x. However, Aqr Long Short Equity is 2.16 times less risky than Europe 125x. It trades about 0.23 of its potential returns per unit of risk. Europe 125x Strategy is currently generating about -0.1 per unit of risk. If you would invest  1,547  in Aqr Long Short Equity on September 13, 2024 and sell it today you would earn a total of  113.00  from holding Aqr Long Short Equity or generate 7.3% return on investment over 90 days.

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

Aqr Long Short Equity  vs.  Europe 125x Strategy

Aqr Long Short

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Aqr Long Short Equity are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Aqr Long may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Europe 125x Strategy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Europe 125x Strategy has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Aqr Long and Europe 125x

The main advantage of trading using opposite Aqr Long and Europe 125x positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aqr Long position performs unexpectedly, Europe 125x 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 Europe 125x will offset losses from the drop in Europe 125x's long position.

The idea behind Aqr Long Short Equity and Europe 125x Strategy 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.