Correlation Between Aqr Sustainable and Virtus Kar

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

Diversification Opportunities for Aqr Sustainable and Virtus Kar

-0.17

Correlation Coefficient

Aqr Sustainable  Virtus Kar

Good diversification

The 3 months correlation between Aqr and Virtus is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Aqr Sustainable Long Short and Virtus Kar Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Kar Small 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 Virtus Kar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Kar Small has no effect on the direction of Aqr Sustainable i.e., Aqr Sustainable and Virtus Kar go up and down completely randomly.

Pair Corralation between Aqr Sustainable and Virtus Kar

Assuming the 90 days horizon Aqr Sustainable Long Short is expected to generate 0.76 times more return on investment than Virtus Kar. However, Aqr Sustainable Long Short is 1.31 times less risky than Virtus Kar. It trades about 0.06 of its potential returns per unit of risk. Virtus Kar Small Cap is currently generating about -0.19 per unit of risk. If you would invest  1,311  in Aqr Sustainable Long Short on December 19, 2024 and sell it today you would earn a total of  34.00  from holding Aqr Sustainable Long Short or generate 2.59% 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.  Virtus Kar Small Cap

Aqr Sustainable Long

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Aqr Sustainable Long Short are ranked lower than 4 (%) 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.

Virtus Kar Small

Risk-Adjusted Performance

Very Weak

Over the last 90 days Virtus Kar Small Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's technical and fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Aqr Sustainable and Virtus Kar

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

The idea behind Aqr Sustainable Long Short and Virtus Kar Small 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.