Correlation Between Boston Partners and Aqr Long

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

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

Diversification Opportunities for Boston Partners and Aqr Long

-0.49

Correlation Coefficient

Boston Partners  Aqr Long

Very good diversification

The 3 months correlation between Boston and Aqr is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Boston Partners Global 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 Boston Partners 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 Boston Partners Global are associated (or correlated) with Aqr Long. 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 Boston Partners i.e., Boston Partners and Aqr Long go up and down completely randomly.

Pair Corralation between Boston Partners and Aqr Long

Assuming the 90 days horizon Boston Partners Global is expected to under-perform the Aqr Long. In addition to that, Boston Partners is 2.23 times more volatile than Aqr Long Short Equity. It trades about -0.14 of its total potential returns per unit of risk. Aqr Long Short Equity is currently generating about 0.25 per unit of volatility. If you would invest  1,542  in Aqr Long Short Equity on September 12, 2024 and sell it today you would earn a total of  121.00  from holding Aqr Long Short Equity or generate 7.85% return on investment over 90 days.

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

Boston Partners Global  vs.  Aqr Long Short Equity

Boston Partners Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Boston Partners Global has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Aqr Long Short

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Aqr Long Short Equity are ranked lower than 19 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Aqr Long may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Boston Partners and Aqr Long

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

The idea behind Boston Partners Global 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.