Correlation Between Aqr Long-short and Chevron Corp
Can any of the company-specific risk be diversified away by investing in both Aqr Long-short and Chevron Corp 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-short and Chevron Corp 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 Chevron Corp, you can compare the effects of market volatilities on Aqr Long-short and Chevron Corp 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-short with a short position of Chevron Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aqr Long-short and Chevron Corp.
Diversification Opportunities for Aqr Long-short and Chevron Corp
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Aqr and Chevron is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Aqr Long Short Equity and Chevron Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chevron Corp and Aqr Long-short 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 Chevron Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chevron Corp has no effect on the direction of Aqr Long-short i.e., Aqr Long-short and Chevron Corp go up and down completely randomly.
Pair Corralation between Aqr Long-short and Chevron Corp
Assuming the 90 days horizon Aqr Long-short is expected to generate 3.59 times less return on investment than Chevron Corp. But when comparing it to its historical volatility, Aqr Long Short Equity is 1.67 times less risky than Chevron Corp. It trades about 0.1 of its potential returns per unit of risk. Chevron Corp is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 15,647 in Chevron Corp on January 23, 2024 and sell it today you would earn a total of 545.00 from holding Chevron Corp or generate 3.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aqr Long Short Equity vs. Chevron Corp
Performance |
| Timeline |
| Aqr Long Short |
| Chevron Corp |
Aqr Long-short and Chevron Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aqr Long-short and Chevron Corp
The main advantage of trading using opposite Aqr Long-short and Chevron Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aqr Long-short position performs unexpectedly, Chevron Corp 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 Chevron Corp will offset losses from the drop in Chevron Corp's long position.| Aqr Long-short vs. Aqr Large Cap | Aqr Long-short vs. Aqr Large Cap | Aqr Long-short vs. Aqr International Defensive | Aqr Long-short vs. Aqr International Defensive |
Check out your portfolio center.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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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