Correlation Between Sierra Core and Aqr Risk-balanced

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

By analyzing existing cross correlation between Sierra E Retirement and Aqr Risk Balanced Modities, you can compare the effects of market volatilities on Sierra Core and Aqr Risk-balanced 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 Sierra Core with a short position of Aqr Risk-balanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sierra Core and Aqr Risk-balanced.

Diversification Opportunities for Sierra Core and Aqr Risk-balanced

0.19

Correlation Coefficient

Sierra Core  Aqr Risk-balanced

Average diversification

The 3 months correlation between Sierra and AQR is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Sierra E Retirement and Aqr Risk Balanced Modities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqr Risk Balanced and Sierra Core 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 Sierra E Retirement are associated (or correlated) with Aqr Risk-balanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aqr Risk Balanced has no effect on the direction of Sierra Core i.e., Sierra Core and Aqr Risk-balanced go up and down completely randomly.

Pair Corralation between Sierra Core and Aqr Risk-balanced

Assuming the 90 days horizon Sierra E Retirement is expected to under-perform the Aqr Risk-balanced. But the mutual fund apears to be less risky and, when comparing its historical volatility, Sierra E Retirement is 1.89 times less risky than Aqr Risk-balanced. The mutual fund trades about -0.06 of its potential returns per unit of risk. The Aqr Risk Balanced Modities is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  866.00  in Aqr Risk Balanced Modities on December 27, 2024 and sell it today you would earn a total of  74.00  from holding Aqr Risk Balanced Modities or generate 8.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Sierra E Retirement  vs.  Aqr Risk Balanced Modities

Sierra E Retirement

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sierra E Retirement has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Sierra Core is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Aqr Risk Balanced

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aqr Risk Balanced Modities are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Aqr Risk-balanced may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Sierra Core and Aqr Risk-balanced

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

The idea behind Sierra E Retirement and Aqr Risk Balanced Modities 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 CEOs Directory module to screen CEOs from public companies around the world.