Correlation Between Aqr Managed and Invesco Balanced

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

By analyzing existing cross correlation between Aqr Managed Futures and Invesco Balanced Risk Modity, you can compare the effects of market volatilities on Aqr Managed and Invesco Balanced 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 Managed with a short position of Invesco Balanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aqr Managed and Invesco Balanced.

Diversification Opportunities for Aqr Managed and Invesco Balanced

0.01

Correlation Coefficient

Aqr Managed  Invesco Balanced

Significant diversification

The 3 months correlation between Aqr and Invesco is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Aqr Managed Futures and Invesco Balanced Risk Modity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Balanced Risk and Aqr Managed 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 Managed Futures are associated (or correlated) with Invesco Balanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Balanced Risk has no effect on the direction of Aqr Managed i.e., Aqr Managed and Invesco Balanced go up and down completely randomly.

Pair Corralation between Aqr Managed and Invesco Balanced

Assuming the 90 days horizon Aqr Managed is expected to generate 1.34 times less return on investment than Invesco Balanced. In addition to that, Aqr Managed is 1.13 times more volatile than Invesco Balanced Risk Modity. It trades about 0.06 of its total potential returns per unit of risk. Invesco Balanced Risk Modity is currently generating about 0.09 per unit of volatility. If you would invest  580.00  in Invesco Balanced Risk Modity on September 13, 2024 and sell it today you would earn a total of  23.00  from holding Invesco Balanced Risk Modity or generate 3.97% return on investment over 90 days.

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

Aqr Managed Futures  vs.  Invesco Balanced Risk Modity

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 forward indicators, Aqr Managed is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Invesco Balanced Risk

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Balanced Risk Modity are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Invesco Balanced 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 Managed and Invesco Balanced

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

The idea behind Aqr Managed Futures and Invesco Balanced Risk Modity 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.