Correlation Between Aqr Long-short and Tax-exempt Fund

Can any of the company-specific risk be diversified away by investing in both Aqr Long-short and Tax-exempt Fund 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-short and Tax-exempt Fund 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 Tax Exempt Fund Of, you can compare the effects of market volatilities on Aqr Long-short and Tax-exempt Fund 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-short with a short position of Tax-exempt Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aqr Long-short and Tax-exempt Fund.

Diversification Opportunities for Aqr Long-short and Tax-exempt Fund

0.4

Correlation Coefficient

Aqr Long-short  Tax-exempt Fund

Very weak diversification

The 3 months correlation between Aqr and Tax-exempt is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Aqr Long Short Equity and Tax Exempt Fund Of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tax Exempt Fund and Aqr Long-short 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 Tax-exempt Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tax Exempt Fund has no effect on the direction of Aqr Long-short i.e., Aqr Long-short and Tax-exempt Fund go up and down completely randomly.

Pair Corralation between Aqr Long-short and Tax-exempt Fund

Assuming the 90 days horizon Aqr Long Short Equity is expected to under-perform the Tax-exempt Fund. In addition to that, Aqr Long-short is 4.6 times more volatile than Tax Exempt Fund Of. It trades about -0.02 of its total potential returns per unit of risk. Tax Exempt Fund Of is currently generating about -0.03 per unit of volatility. If you would invest  1,679  in Tax Exempt Fund Of on October 6, 2024 and sell it today you would lose (6.00) from holding Tax Exempt Fund Of or give up 0.36% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	97.62%
Values	Daily Returns

Aqr Long Short Equity  vs.  Tax Exempt Fund Of

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-short is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Tax Exempt Fund

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tax Exempt Fund Of has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Tax-exempt Fund 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-short and Tax-exempt Fund

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

The idea behind Aqr Long Short Equity and Tax Exempt Fund Of 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.