Correlation Between Profunds Ultrashort and Aqr Large

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

By analyzing existing cross correlation between Profunds Ultrashort Nasdaq 100 and Aqr Large Cap, you can compare the effects of market volatilities on Profunds Ultrashort and Aqr Large 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 Profunds Ultrashort with a short position of Aqr Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Profunds Ultrashort and Aqr Large.

Diversification Opportunities for Profunds Ultrashort and Aqr Large

-0.77

Correlation Coefficient

Profunds Ultrashort  Aqr Large

Pay attention - limited upside

The 3 months correlation between Profunds and Aqr is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Profunds Ultrashort Nasdaq 100 and Aqr Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqr Large Cap and Profunds Ultrashort 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 Profunds Ultrashort Nasdaq 100 are associated (or correlated) with Aqr Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aqr Large Cap has no effect on the direction of Profunds Ultrashort i.e., Profunds Ultrashort and Aqr Large go up and down completely randomly.

Pair Corralation between Profunds Ultrashort and Aqr Large

Assuming the 90 days horizon Profunds Ultrashort Nasdaq 100 is expected to generate 2.38 times more return on investment than Aqr Large. However, Profunds Ultrashort is 2.38 times more volatile than Aqr Large Cap. It trades about 0.01 of its potential returns per unit of risk. Aqr Large Cap is currently generating about -0.04 per unit of risk. If you would invest  3,655  in Profunds Ultrashort Nasdaq 100 on February 4, 2024 and sell it today you would earn a total of  0.00  from holding Profunds Ultrashort Nasdaq 100 or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.65%
Values	Daily Returns

Profunds Ultrashort Nasdaq 100  vs.  Aqr Large Cap

Profunds Ultrashort

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Profunds Ultrashort Nasdaq 100 has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Profunds Ultrashort is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Aqr Large Cap

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Aqr Large Cap are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong primary indicators, Aqr Large is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Profunds Ultrashort and Aqr Large

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

The idea behind Profunds Ultrashort Nasdaq 100 and Aqr Large Cap 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..