Correlation Between Pimco Trends and Aqr Long

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

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

Diversification Opportunities for Pimco Trends and Aqr Long

-0.12

Correlation Coefficient

Pimco Trends  Aqr Long

Good diversification

The 3 months correlation between Pimco and Aqr is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Trends Managed 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 Pimco Trends 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 Pimco Trends Managed 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 Pimco Trends i.e., Pimco Trends and Aqr Long go up and down completely randomly.

Pair Corralation between Pimco Trends and Aqr Long

Assuming the 90 days horizon Pimco Trends Managed is expected to under-perform the Aqr Long. In addition to that, Pimco Trends is 1.06 times more volatile than Aqr Long Short Equity. It trades about -0.04 of its total potential returns per unit of risk. Aqr Long Short Equity is currently generating about 0.18 per unit of volatility. If you would invest  1,044  in Aqr Long Short Equity on September 4, 2024 and sell it today you would earn a total of  606.00  from holding Aqr Long Short Equity or generate 58.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Pimco Trends Managed  vs.  Aqr Long Short Equity

Pimco Trends Managed

Risk-Adjusted Performance

0 of 100

Very Weak

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

Aqr Long Short

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Aqr Long Short Equity are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Aqr Long is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Pimco Trends and Aqr Long

The main advantage of trading using opposite Pimco Trends and Aqr Long positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco Trends 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 Pimco Trends Managed 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.