Correlation Between Qs Moderate and Aqr Sustainable

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

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

Diversification Opportunities for Qs Moderate and Aqr Sustainable

0.92

Correlation Coefficient

Qs Moderate  Aqr Sustainable

Almost no diversification

The 3 months correlation between SCGCX and Aqr is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Qs Moderate Growth and Aqr Sustainable Long Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqr Sustainable Long and Qs Moderate 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 Qs Moderate Growth are associated (or correlated) with Aqr Sustainable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aqr Sustainable Long has no effect on the direction of Qs Moderate i.e., Qs Moderate and Aqr Sustainable go up and down completely randomly.

Pair Corralation between Qs Moderate and Aqr Sustainable

Assuming the 90 days horizon Qs Moderate is expected to generate 1.35 times less return on investment than Aqr Sustainable. But when comparing it to its historical volatility, Qs Moderate Growth is 1.44 times less risky than Aqr Sustainable. It trades about 0.16 of its potential returns per unit of risk. Aqr Sustainable Long Short is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  1,451  in Aqr Sustainable Long Short on September 13, 2024 and sell it today you would earn a total of  101.00  from holding Aqr Sustainable Long Short or generate 6.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.44%
Values	Daily Returns

Qs Moderate Growth  vs.  Aqr Sustainable Long Short

Qs Moderate Growth

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Qs Moderate Growth are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Qs Moderate is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Aqr Sustainable Long

Risk-Adjusted Performance

11 of 100

Good

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 basic indicators, Aqr Sustainable may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Qs Moderate and Aqr Sustainable

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

The idea behind Qs Moderate Growth and Aqr Sustainable Long Short 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.