Correlation Between Aqr Sustainable and Cutler Equity

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

By analyzing existing cross correlation between Aqr Sustainable Long Short and Cutler Equity, you can compare the effects of market volatilities on Aqr Sustainable and Cutler Equity 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 Sustainable with a short position of Cutler Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aqr Sustainable and Cutler Equity.

Diversification Opportunities for Aqr Sustainable and Cutler Equity

0.61

Correlation Coefficient

Aqr Sustainable  Cutler Equity

Poor diversification

The 3 months correlation between Aqr and Cutler is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Aqr Sustainable Long Short and Cutler Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cutler Equity and Aqr Sustainable 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 Sustainable Long Short are associated (or correlated) with Cutler Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cutler Equity has no effect on the direction of Aqr Sustainable i.e., Aqr Sustainable and Cutler Equity go up and down completely randomly.

Pair Corralation between Aqr Sustainable and Cutler Equity

Assuming the 90 days horizon Aqr Sustainable Long Short is expected to generate 1.16 times more return on investment than Cutler Equity. However, Aqr Sustainable is 1.16 times more volatile than Cutler Equity. It trades about 0.09 of its potential returns per unit of risk. Cutler Equity is currently generating about 0.07 per unit of risk. If you would invest  1,314  in Aqr Sustainable Long Short on December 28, 2024 and sell it today you would earn a total of  55.00  from holding Aqr Sustainable Long Short or generate 4.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

Aqr Sustainable Long Short  vs.  Cutler Equity

Aqr Sustainable Long

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Aqr Sustainable Long Short 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 Sustainable is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Cutler Equity

Risk-Adjusted Performance

Modest

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

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

The idea behind Aqr Sustainable Long Short and Cutler Equity 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 CEOs Directory module to screen CEOs from public companies around the world.