Correlation Between Aqr Sustainable and Smallcap World

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

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

Diversification Opportunities for Aqr Sustainable and Smallcap World

0.12

Correlation Coefficient

Aqr Sustainable  Smallcap World

Average diversification

The 3 months correlation between Aqr and Smallcap is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Aqr Sustainable Long Short and Smallcap World Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smallcap World and Aqr Sustainable 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 Sustainable Long Short are associated (or correlated) with Smallcap World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smallcap World has no effect on the direction of Aqr Sustainable i.e., Aqr Sustainable and Smallcap World go up and down completely randomly.

Pair Corralation between Aqr Sustainable and Smallcap World

Assuming the 90 days horizon Aqr Sustainable Long Short is expected to generate 0.92 times more return on investment than Smallcap World. However, Aqr Sustainable Long Short is 1.09 times less risky than Smallcap World. It trades about 0.12 of its potential returns per unit of risk. Smallcap World Fund is currently generating about 0.06 per unit of risk. If you would invest  1,514  in Aqr Sustainable Long Short on September 13, 2025 and sell it today you would earn a total of  89.00  from holding Aqr Sustainable Long Short or generate 5.88% return on investment over 90 days.

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

Aqr Sustainable Long Short  vs.  Smallcap World Fund

Aqr Sustainable Long

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Aqr Sustainable Long Short are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Aqr Sustainable is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Smallcap World

Risk-Adjusted Performance

Soft

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

Pair Trading with Aqr Sustainable and Smallcap World

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

The idea behind Aqr Sustainable Long Short and Smallcap World 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.