Correlation Between Nationwide Inflation-protec and Aqr Managed

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

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

Diversification Opportunities for Nationwide Inflation-protec and Aqr Managed

0.09

Correlation Coefficient

Nationwide Inflation-protec  Aqr Managed

Significant diversification

The 3 months correlation between NATIONWIDE and Aqr is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Nationwide Inflation Protected 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 Nationwide Inflation-protec 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 Nationwide Inflation Protected Securities 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 Nationwide Inflation-protec i.e., Nationwide Inflation-protec and Aqr Managed go up and down completely randomly.

Pair Corralation between Nationwide Inflation-protec and Aqr Managed

Assuming the 90 days horizon Nationwide Inflation-protec is expected to generate 10.96 times less return on investment than Aqr Managed. But when comparing it to its historical volatility, Nationwide Inflation Protected Securities is 3.44 times less risky than Aqr Managed. It trades about 0.02 of its potential returns per unit of risk. Aqr Managed Futures is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  807.00  in Aqr Managed Futures on August 31, 2024 and sell it today you would earn a total of  10.00  from holding Aqr Managed Futures or generate 1.24% return on investment over 90 days.

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

Nationwide Inflation Protected  vs.  Aqr Managed Futures

Nationwide Inflation-protec

Risk-Adjusted Performance

0 of 100

Very Weak

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

Aqr Managed Futures

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Aqr Managed Futures are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Aqr Managed is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Nationwide Inflation-protec and Aqr Managed

The main advantage of trading using opposite Nationwide Inflation-protec and Aqr Managed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nationwide Inflation-protec 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 Nationwide Inflation Protected Securities 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.

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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..