Correlation Between Aqr Long and American Beacon

Can any of the company-specific risk be diversified away by investing in both Aqr Long and American Beacon 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 American Beacon 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 American Beacon Soundpointfltrtinc, you can compare the effects of market volatilities on Aqr Long and American Beacon 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 American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aqr Long and American Beacon.

Diversification Opportunities for Aqr Long and American Beacon

0.49

Correlation Coefficient

Aqr Long  American Beacon

Very weak diversification

The 3 months correlation between Aqr and American is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Aqr Long Short Equity and American Beacon Soundpointfltr in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Soun 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 American Beacon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Beacon Soun has no effect on the direction of Aqr Long i.e., Aqr Long and American Beacon go up and down completely randomly.

Pair Corralation between Aqr Long and American Beacon

Assuming the 90 days horizon Aqr Long Short Equity is expected to generate 1.88 times more return on investment than American Beacon. However, Aqr Long is 1.88 times more volatile than American Beacon Soundpointfltrtinc. It trades about 0.25 of its potential returns per unit of risk. American Beacon Soundpointfltrtinc is currently generating about 0.12 per unit of risk. 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 Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Aqr Long Short Equity  vs.  American Beacon Soundpointfltr

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.

American Beacon Soun

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in American Beacon Soundpointfltrtinc are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, American Beacon is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Aqr Long and American Beacon

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

The idea behind Aqr Long Short Equity and American Beacon Soundpointfltrtinc 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.