Correlation Between Aqr Alternative and Applied Finance

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

By analyzing existing cross correlation between Aqr Alternative Risk and Applied Finance Explorer, you can compare the effects of market volatilities on Aqr Alternative and Applied Finance 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 Alternative with a short position of Applied Finance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aqr Alternative and Applied Finance.

Diversification Opportunities for Aqr Alternative and Applied Finance

0.23

Correlation Coefficient

Aqr Alternative  Applied Finance

Modest diversification

The 3 months correlation between Aqr and Applied is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Aqr Alternative Risk and Applied Finance Explorer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applied Finance Explorer and Aqr Alternative 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 Alternative Risk are associated (or correlated) with Applied Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Applied Finance Explorer has no effect on the direction of Aqr Alternative i.e., Aqr Alternative and Applied Finance go up and down completely randomly.

Pair Corralation between Aqr Alternative and Applied Finance

Assuming the 90 days horizon Aqr Alternative Risk is expected to generate 0.5 times more return on investment than Applied Finance. However, Aqr Alternative Risk is 1.98 times less risky than Applied Finance. It trades about 0.28 of its potential returns per unit of risk. Applied Finance Explorer is currently generating about 0.1 per unit of risk. If you would invest  1,256  in Aqr Alternative Risk on August 3, 2025 and sell it today you would earn a total of  124.00  from holding Aqr Alternative Risk or generate 9.87% return on investment over 90 days.

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

Aqr Alternative Risk  vs.  Applied Finance Explorer

Aqr Alternative Risk

Risk-Adjusted Performance

Solid

Over the last 90 days Aqr Alternative Risk has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly weak forward indicators, Aqr Alternative may actually be approaching a critical reversion point that can send shares even higher in December 2025.

Applied Finance Explorer

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Applied Finance Explorer are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Applied Finance may actually be approaching a critical reversion point that can send shares even higher in December 2025.

Pair Trading with Aqr Alternative and Applied Finance

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

The idea behind Aqr Alternative Risk and Applied Finance Explorer 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.