Correlation Between Aqr Managed and Virginia Bond

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

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

Diversification Opportunities for Aqr Managed and Virginia Bond

0.45

Correlation Coefficient

Aqr Managed  Virginia Bond

Very weak diversification

The 3 months correlation between Aqr and Virginia is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Aqr Managed Futures and Virginia Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virginia Bond and Aqr Managed 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 Managed Futures are associated (or correlated) with Virginia Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virginia Bond has no effect on the direction of Aqr Managed i.e., Aqr Managed and Virginia Bond go up and down completely randomly.

Pair Corralation between Aqr Managed and Virginia Bond

Assuming the 90 days horizon Aqr Managed Futures is expected to under-perform the Virginia Bond. In addition to that, Aqr Managed is 3.51 times more volatile than Virginia Bond Fund. It trades about -0.06 of its total potential returns per unit of risk. Virginia Bond Fund is currently generating about 0.13 per unit of volatility. If you would invest  1,028  in Virginia Bond Fund on September 5, 2024 and sell it today you would earn a total of  43.00  from holding Virginia Bond Fund or generate 4.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.2%
Values	Daily Returns

Aqr Managed Futures  vs.  Virginia Bond Fund

Aqr Managed Futures

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Aqr Managed Futures are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Aqr Managed is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Virginia Bond

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Virginia Bond Fund are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Virginia 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 Managed and Virginia Bond

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

The idea behind Aqr Managed Futures and Virginia 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.