Correlation Between Utilities Ultrasector and Aqr Long-short

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Can any of the company-specific risk be diversified away by investing in both Utilities Ultrasector and Aqr Long-short 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 Utilities Ultrasector and Aqr Long-short into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Utilities Ultrasector Profund and Aqr Long Short Equity, you can compare the effects of market volatilities on Utilities Ultrasector and Aqr Long-short 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 Utilities Ultrasector with a short position of Aqr Long-short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Utilities Ultrasector and Aqr Long-short.

Diversification Opportunities for Utilities Ultrasector and Aqr Long-short

UtilitiesAqrDiversified AwayUtilitiesAqrDiversified Away100%
-0.18
  Correlation Coefficient

Good diversification

The 3 months correlation between Utilities and Aqr is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Utilities Ultrasector Profund and Aqr Long Short Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqr Long Short and Utilities Ultrasector 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 Utilities Ultrasector Profund are associated (or correlated) with Aqr Long-short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aqr Long Short has no effect on the direction of Utilities Ultrasector i.e., Utilities Ultrasector and Aqr Long-short go up and down completely randomly.

Pair Corralation between Utilities Ultrasector and Aqr Long-short

Assuming the 90 days horizon Utilities Ultrasector Profund is expected to under-perform the Aqr Long-short. In addition to that, Utilities Ultrasector is 3.24 times more volatile than Aqr Long Short Equity. It trades about 0.0 of its total potential returns per unit of risk. Aqr Long Short Equity is currently generating about 0.31 per unit of volatility. If you would invest  1,530  in Aqr Long Short Equity on November 16, 2024 and sell it today you would earn a total of  142.00  from holding Aqr Long Short Equity or generate 9.28% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Utilities Ultrasector Profund  vs.  Aqr Long Short Equity

 Performance 
JavaScript chart by amCharts 3.21.15NovDec2025 -50510
JavaScript chart by amCharts 3.21.15UTPIX QLENX
       Timeline  
Utilities Ultrasector 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Utilities Ultrasector Profund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Utilities Ultrasector is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb687072747678
Aqr Long Short 

Risk-Adjusted Performance

Solid

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Aqr Long Short Equity are ranked lower than 24 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Aqr Long-short may actually be approaching a critical reversion point that can send shares even higher in March 2025.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb15.415.615.81616.216.416.616.8

Utilities Ultrasector and Aqr Long-short Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-5.03-3.77-2.51-1.240.02151.292.583.865.15 0.51.01.5
JavaScript chart by amCharts 3.21.15UTPIX QLENX
       Returns  

Pair Trading with Utilities Ultrasector and Aqr Long-short

The main advantage of trading using opposite Utilities Ultrasector and Aqr Long-short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Utilities Ultrasector position performs unexpectedly, Aqr Long-short 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 Long-short will offset losses from the drop in Aqr Long-short's long position.
The idea behind Utilities Ultrasector Profund and Aqr Long Short Equity 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.

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