Correlation Between Aqr Diversified and Science Technology

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

By analyzing existing cross correlation between Aqr Diversified Arbitrage and Science Technology Fund, you can compare the effects of market volatilities on Aqr Diversified and Science Technology 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 Diversified with a short position of Science Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aqr Diversified and Science Technology.

Diversification Opportunities for Aqr Diversified and Science Technology

0.7

Correlation Coefficient

Aqr Diversified  Science Technology

Poor diversification

The 3 months correlation between Aqr and Science is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Aqr Diversified Arbitrage and Science Technology Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Science Technology and Aqr Diversified 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 Diversified Arbitrage are associated (or correlated) with Science Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Science Technology has no effect on the direction of Aqr Diversified i.e., Aqr Diversified and Science Technology go up and down completely randomly.

Pair Corralation between Aqr Diversified and Science Technology

Assuming the 90 days horizon Aqr Diversified is expected to generate 7.47 times less return on investment than Science Technology. But when comparing it to its historical volatility, Aqr Diversified Arbitrage is 11.08 times less risky than Science Technology. It trades about 0.34 of its potential returns per unit of risk. Science Technology Fund is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  3,309  in Science Technology Fund on May 18, 2025 and sell it today you would earn a total of  478.00  from holding Science Technology Fund or generate 14.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

Aqr Diversified Arbitrage  vs.  Science Technology Fund

Aqr Diversified Arbitrage

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Aqr Diversified Arbitrage are ranked lower than 26 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Aqr Diversified is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Science Technology

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Science Technology Fund are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Science Technology showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aqr Diversified and Science Technology

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

The idea behind Aqr Diversified Arbitrage and Science Technology Fund 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.