Correlation Between Aqr Long and Federated Mdt

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

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

Diversification Opportunities for Aqr Long and Federated Mdt

0.89

Correlation Coefficient

Aqr Long  Federated Mdt

Very poor diversification

The 3 months correlation between Aqr and Federated is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Aqr Long Short Equity and Federated Mdt All in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Mdt All and Aqr Long 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 Aqr Long Short Equity are associated (or correlated) with Federated Mdt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Mdt All has no effect on the direction of Aqr Long i.e., Aqr Long and Federated Mdt go up and down completely randomly.

Pair Corralation between Aqr Long and Federated Mdt

Assuming the 90 days horizon Aqr Long is expected to generate 2.11 times less return on investment than Federated Mdt. But when comparing it to its historical volatility, Aqr Long Short Equity is 1.63 times less risky than Federated Mdt. It trades about 0.21 of its potential returns per unit of risk. Federated Mdt All is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  4,444  in Federated Mdt All on September 4, 2024 and sell it today you would earn a total of  601.00  from holding Federated Mdt All or generate 13.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.44%
Values	Daily Returns

Aqr Long Short Equity  vs.  Federated Mdt All

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.

Federated Mdt All

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Federated Mdt All are ranked lower than 21 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Federated Mdt showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aqr Long and Federated Mdt

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

The idea behind Aqr Long Short Equity and Federated Mdt All 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.