Correlation Between Aqr Sustainable and Victory Integrity

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

Diversification Opportunities for Aqr Sustainable and Victory Integrity

0.87

Correlation Coefficient

Aqr Sustainable  Victory Integrity

Very poor diversification

The 3 months correlation between Aqr and Victory is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Aqr Sustainable Long Short and Victory Integrity Smallmid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Victory Integrity 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 Victory Integrity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Victory Integrity has no effect on the direction of Aqr Sustainable i.e., Aqr Sustainable and Victory Integrity go up and down completely randomly.

Pair Corralation between Aqr Sustainable and Victory Integrity

Assuming the 90 days horizon Aqr Sustainable Long Short is expected to generate 1.2 times more return on investment than Victory Integrity. However, Aqr Sustainable is 1.2 times more volatile than Victory Integrity Smallmid Cap. It trades about -0.06 of its potential returns per unit of risk. Victory Integrity Smallmid Cap is currently generating about -0.09 per unit of risk. If you would invest  1,447  in Aqr Sustainable Long Short on October 10, 2024 and sell it today you would lose (115.00) from holding Aqr Sustainable Long Short or give up 7.95% of portfolio value over 90 days.

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

Aqr Sustainable Long Short  vs.  Victory Integrity Smallmid Cap

Aqr Sustainable Long

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aqr Sustainable Long Short has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Victory Integrity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Victory Integrity Smallmid Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Aqr Sustainable and Victory Integrity

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

The idea behind Aqr Sustainable Long Short and Victory Integrity Smallmid Cap 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.