Correlation Between Unity Software and Aqr Managed

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

By analyzing existing cross correlation between Unity Software and Aqr Managed Futures, you can compare the effects of market volatilities on Unity Software and Aqr Managed 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 Unity Software with a short position of Aqr Managed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Unity Software and Aqr Managed.

Diversification Opportunities for Unity Software and Aqr Managed

-0.06

Correlation Coefficient

Unity Software  Aqr Managed

Good diversification

The 3 months correlation between Unity and Aqr is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Unity Software and Aqr Managed Futures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqr Managed Futures and Unity Software 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 Unity Software are associated (or correlated) with Aqr Managed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aqr Managed Futures has no effect on the direction of Unity Software i.e., Unity Software and Aqr Managed go up and down completely randomly.

Pair Corralation between Unity Software and Aqr Managed

Taking into account the 90-day investment horizon Unity Software is expected to generate 3.42 times less return on investment than Aqr Managed. In addition to that, Unity Software is 6.12 times more volatile than Aqr Managed Futures. It trades about 0.01 of its total potential returns per unit of risk. Aqr Managed Futures is currently generating about 0.16 per unit of volatility. If you would invest  836.00  in Aqr Managed Futures on December 26, 2024 and sell it today you would earn a total of  76.00  from holding Aqr Managed Futures or generate 9.09% return on investment over 90 days.

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

Unity Software  vs.  Aqr Managed Futures

Unity Software

Risk-Adjusted Performance

Very Weak

Over the last 90 days Unity Software has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Unity Software is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Aqr Managed Futures

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aqr Managed Futures are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Aqr Managed may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Unity Software and Aqr Managed

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

The idea behind Unity Software and Aqr Managed Futures 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.