Correlation Between Balanced Fund and Aqr Risk-balanced

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

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

Diversification Opportunities for Balanced Fund and Aqr Risk-balanced

0.55

Correlation Coefficient

Balanced Fund  Aqr Risk-balanced

Very weak diversification

The 3 months correlation between Balanced and Aqr is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Balanced Fund Investor and Aqr Risk Balanced Modities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqr Risk Balanced and Balanced Fund 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 Balanced Fund Investor are associated (or correlated) with Aqr Risk-balanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aqr Risk Balanced has no effect on the direction of Balanced Fund i.e., Balanced Fund and Aqr Risk-balanced go up and down completely randomly.

Pair Corralation between Balanced Fund and Aqr Risk-balanced

Assuming the 90 days horizon Balanced Fund Investor is expected to generate 0.52 times more return on investment than Aqr Risk-balanced. However, Balanced Fund Investor is 1.92 times less risky than Aqr Risk-balanced. It trades about 0.41 of its potential returns per unit of risk. Aqr Risk Balanced Modities is currently generating about -0.02 per unit of risk. If you would invest  1,956  in Balanced Fund Investor on September 5, 2024 and sell it today you would earn a total of  77.00  from holding Balanced Fund Investor or generate 3.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Balanced Fund Investor  vs.  Aqr Risk Balanced Modities

Balanced Fund Investor

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Balanced Fund Investor are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Balanced Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Aqr Risk Balanced

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aqr Risk Balanced Modities are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Aqr Risk-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 Balanced Fund and Aqr Risk-balanced

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

The idea behind Balanced Fund Investor and Aqr Risk Balanced Modities 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.