Correlation Between Aqr Long-short and ProShares

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Can any of the company-specific risk be diversified away by investing in both Aqr Long-short and ProShares 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 ProShares 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 ProShares K 1 Free, you can compare the effects of market volatilities on Aqr Long-short and ProShares 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 ProShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aqr Long-short and ProShares.

Diversification Opportunities for Aqr Long-short and ProShares

0.87
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Aqr and ProShares is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding AQR LONG-SHORT EQUITY and ProShares K-1 Free in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares K-1 Free 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 ProShares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares K-1 Free has no effect on the direction of Aqr Long-short i.e., Aqr Long-short and ProShares go up and down completely randomly.

Pair Corralation between Aqr Long-short and ProShares

Assuming the 90 days horizon Aqr Long Short Equity is expected to generate 0.34 times more return on investment than ProShares. However, Aqr Long Short Equity is 2.94 times less risky than ProShares. It trades about 0.95 of its potential returns per unit of risk. ProShares K 1 Free is currently generating about 0.24 per unit of risk. If you would invest  1,380  in Aqr Long Short Equity on December 29, 2023 and sell it today you would earn a total of  89.00  from holding Aqr Long Short Equity or generate 6.45% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

AQR LONG-SHORT EQUITY  vs.  ProShares K-1 Free

 Performance 
       Timeline  
Aqr Long-short Equity 

Risk-Adjusted Performance

41 of 100

 
Low
 
High
Excellent
Compared to the overall equity markets, risk-adjusted returns on investments in Aqr Long Short Equity are ranked lower than 41 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly fragile basic indicators, Aqr Long-short showed solid returns over the last few months and may actually be approaching a breakup point.
ProShares K-1 Free 

Risk-Adjusted Performance

13 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in ProShares K 1 Free are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite weak essential indicators, ProShares disclosed solid returns over the last few months and may actually be approaching a breakup point.

Aqr Long-short and ProShares Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Aqr Long-short and ProShares

The main advantage of trading using opposite Aqr Long-short and ProShares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aqr Long-short position performs unexpectedly, ProShares 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 ProShares will offset losses from the drop in ProShares' long position.
The idea behind Aqr Long Short Equity and ProShares K 1 Free 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.
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.

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