Correlation Between Locorr Longshort and Aqr Managed

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

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

Diversification Opportunities for Locorr Longshort and Aqr Managed

0.34

Correlation Coefficient

Locorr Longshort  Aqr Managed

Weak diversification

The 3 months correlation between Locorr and Aqr is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Locorr Longshort Modities and Aqr Managed Futures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqr Managed Futures and Locorr Longshort 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 Locorr Longshort Modities are associated (or correlated) with Aqr Managed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aqr Managed Futures has no effect on the direction of Locorr Longshort i.e., Locorr Longshort and Aqr Managed go up and down completely randomly.

Pair Corralation between Locorr Longshort and Aqr Managed

Assuming the 90 days horizon Locorr Longshort Modities is expected to generate 0.75 times more return on investment than Aqr Managed. However, Locorr Longshort Modities is 1.34 times less risky than Aqr Managed. It trades about 0.06 of its potential returns per unit of risk. Aqr Managed Futures is currently generating about -0.03 per unit of risk. If you would invest  869.00  in Locorr Longshort Modities on May 6, 2025 and sell it today you would earn a total of  12.00  from holding Locorr Longshort Modities or generate 1.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Locorr Longshort Modities  vs.  Aqr Managed Futures

Locorr Longshort Modities

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Locorr Longshort Modities are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Locorr Longshort is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Aqr Managed Futures

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Locorr Longshort and Aqr Managed

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

The idea behind Locorr Longshort Modities and Aqr Managed Futures 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.