Correlation Between Aqr Sustainable and Nationwide Destination

Can any of the company-specific risk be diversified away by investing in both Aqr Sustainable and Nationwide Destination 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 Nationwide Destination 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 Nationwide Destination 2055, you can compare the effects of market volatilities on Aqr Sustainable and Nationwide Destination 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 Nationwide Destination. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aqr Sustainable and Nationwide Destination.

Diversification Opportunities for Aqr Sustainable and Nationwide Destination

-0.48

Correlation Coefficient

Aqr Sustainable  Nationwide Destination

Very good diversification

The 3 months correlation between Aqr and Nationwide is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Aqr Sustainable Long Short and Nationwide Destination 2055 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nationwide Destination 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 Nationwide Destination. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nationwide Destination has no effect on the direction of Aqr Sustainable i.e., Aqr Sustainable and Nationwide Destination go up and down completely randomly.

Pair Corralation between Aqr Sustainable and Nationwide Destination

Assuming the 90 days horizon Aqr Sustainable Long Short is expected to under-perform the Nationwide Destination. But the mutual fund apears to be less risky and, when comparing its historical volatility, Aqr Sustainable Long Short is 1.36 times less risky than Nationwide Destination. The mutual fund trades about -0.04 of its potential returns per unit of risk. The Nationwide Destination 2055 is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  1,335  in Nationwide Destination 2055 on October 25, 2024 and sell it today you would earn a total of  24.00  from holding Nationwide Destination 2055 or generate 1.8% return on investment over 90 days.

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

Aqr Sustainable Long Short  vs.  Nationwide Destination 2055

Aqr Sustainable Long

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aqr Sustainable Long Short are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Aqr Sustainable may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Nationwide Destination

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nationwide Destination 2055 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 Nationwide Destination

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

The idea behind Aqr Sustainable Long Short and Nationwide Destination 2055 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.

Check out your portfolio center.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.