Correlation Between Aqr Equity and Dunham Corporate/govern

Can any of the company-specific risk be diversified away by investing in both Aqr Equity and Dunham Corporate/govern 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 Equity and Dunham Corporate/govern into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aqr Equity Market and Dunham Porategovernment Bond, you can compare the effects of market volatilities on Aqr Equity and Dunham Corporate/govern 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 Equity with a short position of Dunham Corporate/govern. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aqr Equity and Dunham Corporate/govern.

Diversification Opportunities for Aqr Equity and Dunham Corporate/govern

-0.14

Correlation Coefficient

Aqr Equity  Dunham Corporate/govern

Good diversification

The 3 months correlation between Aqr and Dunham is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Aqr Equity Market and Dunham Porategovernment Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dunham Porategovernment and Aqr Equity 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 Equity Market are associated (or correlated) with Dunham Corporate/govern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dunham Porategovernment has no effect on the direction of Aqr Equity i.e., Aqr Equity and Dunham Corporate/govern go up and down completely randomly.

Pair Corralation between Aqr Equity and Dunham Corporate/govern

Assuming the 90 days horizon Aqr Equity Market is expected to under-perform the Dunham Corporate/govern. In addition to that, Aqr Equity is 5.73 times more volatile than Dunham Porategovernment Bond. It trades about -0.13 of its total potential returns per unit of risk. Dunham Porategovernment Bond is currently generating about -0.33 per unit of volatility. If you would invest  1,263  in Dunham Porategovernment Bond on October 4, 2024 and sell it today you would lose (22.00) from holding Dunham Porategovernment Bond or give up 1.74% of portfolio value over 90 days.

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

Aqr Equity Market  vs.  Dunham Porategovernment Bond

Aqr Equity Market

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Aqr Equity Market are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Aqr Equity is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Dunham Porategovernment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dunham Porategovernment Bond has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Dunham Corporate/govern 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 Equity and Dunham Corporate/govern

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

The idea behind Aqr Equity Market and Dunham Porategovernment Bond 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.