Correlation Between Aqr Equity and Victory Market

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

Diversification Opportunities for Aqr Equity and Victory Market

0.03

Correlation Coefficient

Aqr Equity  Victory Market

Significant diversification

The 3 months correlation between Aqr and Victory is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Aqr Equity Market and Victory Market Neutral in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Victory Market Neutral 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 Victory Market. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Victory Market Neutral has no effect on the direction of Aqr Equity i.e., Aqr Equity and Victory Market go up and down completely randomly.

Pair Corralation between Aqr Equity and Victory Market

Assuming the 90 days horizon Aqr Equity Market is expected to under-perform the Victory Market. In addition to that, Aqr Equity is 5.16 times more volatile than Victory Market Neutral. It trades about -0.12 of its total potential returns per unit of risk. Victory Market Neutral is currently generating about 0.11 per unit of volatility. If you would invest  836.00  in Victory Market Neutral on October 9, 2024 and sell it today you would earn a total of  5.00  from holding Victory Market Neutral or generate 0.6% return on investment over 90 days.

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

Aqr Equity Market  vs.  Victory Market Neutral

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

Victory Market Neutral

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Victory Market Neutral are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong primary indicators, Victory Market 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 Victory Market

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

The idea behind Aqr Equity Market and Victory Market Neutral 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.