Correlation Between Aqr Diversified and Nasdaq-100 Index
Can any of the company-specific risk be diversified away by investing in both Aqr Diversified and Nasdaq-100 Index 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 Nasdaq-100 Index 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 Nasdaq 100 Index Fund, you can compare the effects of market volatilities on Aqr Diversified and Nasdaq-100 Index 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 Nasdaq-100 Index. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aqr Diversified and Nasdaq-100 Index.
Diversification Opportunities for Aqr Diversified and Nasdaq-100 Index
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Aqr and Nasdaq-100 is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Aqr Diversified Arbitrage and Nasdaq 100 Index Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nasdaq 100 Index 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 Nasdaq-100 Index. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nasdaq 100 Index has no effect on the direction of Aqr Diversified i.e., Aqr Diversified and Nasdaq-100 Index go up and down completely randomly.
Pair Corralation between Aqr Diversified and Nasdaq-100 Index
Assuming the 90 days horizon Aqr Diversified is expected to generate 6.75 times less return on investment than Nasdaq-100 Index. But when comparing it to its historical volatility, Aqr Diversified Arbitrage is 9.64 times less risky than Nasdaq-100 Index. It trades about 0.25 of its potential returns per unit of risk. Nasdaq 100 Index Fund is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 5,375 in Nasdaq 100 Index Fund on June 9, 2025 and sell it today you would earn a total of 466.00 from holding Nasdaq 100 Index Fund or generate 8.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aqr Diversified Arbitrage vs. Nasdaq 100 Index Fund
Performance |
| Timeline |
| Aqr Diversified Arbitrage |
| Nasdaq 100 Index |
Aqr Diversified and Nasdaq-100 Index Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aqr Diversified and Nasdaq-100 Index
The main advantage of trading using opposite Aqr Diversified and Nasdaq-100 Index positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aqr Diversified position performs unexpectedly, Nasdaq-100 Index 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 Nasdaq-100 Index will offset losses from the drop in Nasdaq-100 Index's long position.| Aqr Diversified vs. Aqr Large Cap | Aqr Diversified vs. Aqr Large Cap | Aqr Diversified vs. Aqr International Defensive | Aqr Diversified vs. Aqr International Defensive |
| Nasdaq-100 Index vs. Capital Growth Fund | Nasdaq-100 Index vs. Emerging Markets Fund | Nasdaq-100 Index vs. High Income Fund | Nasdaq-100 Index vs. International Fund International |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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