Correlation Between Aqr Sustainable and Deutsche Munications

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

Diversification Opportunities for Aqr Sustainable and Deutsche Munications

-0.05

Correlation Coefficient

Aqr Sustainable  Deutsche Munications

Good diversification

The 3 months correlation between Aqr and Deutsche is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Aqr Sustainable Long Short and Deutsche Munications Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutsche Munications 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 Deutsche Munications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deutsche Munications has no effect on the direction of Aqr Sustainable i.e., Aqr Sustainable and Deutsche Munications go up and down completely randomly.

Pair Corralation between Aqr Sustainable and Deutsche Munications

Assuming the 90 days horizon Aqr Sustainable is expected to generate 1.6 times less return on investment than Deutsche Munications. In addition to that, Aqr Sustainable is 1.48 times more volatile than Deutsche Munications Fund. It trades about 0.05 of its total potential returns per unit of risk. Deutsche Munications Fund is currently generating about 0.13 per unit of volatility. If you would invest  1,995  in Deutsche Munications Fund on October 9, 2024 and sell it today you would earn a total of  1,835  from holding Deutsche Munications Fund or generate 91.98% return on investment over 90 days.

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

Aqr Sustainable Long Short  vs.  Deutsche Munications Fund

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.

Deutsche Munications

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Deutsche Munications Fund are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical indicators, Deutsche Munications may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Aqr Sustainable and Deutsche Munications

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

The idea behind Aqr Sustainable Long Short and Deutsche Munications Fund 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.