Correlation Between Aristotle Funds and Champlain Small

Can any of the company-specific risk be diversified away by investing in both Aristotle Funds and Champlain Small 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 Aristotle Funds and Champlain Small into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aristotle Funds Series and Champlain Small, you can compare the effects of market volatilities on Aristotle Funds and Champlain Small 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 Aristotle Funds with a short position of Champlain Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aristotle Funds and Champlain Small.

Diversification Opportunities for Aristotle Funds and Champlain Small

0.48

Correlation Coefficient

Aristotle Funds  Champlain Small

Very weak diversification

The 3 months correlation between Aristotle and Champlain is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Aristotle Funds Series and Champlain Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Champlain Small and Aristotle Funds 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 Aristotle Funds Series are associated (or correlated) with Champlain Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Champlain Small has no effect on the direction of Aristotle Funds i.e., Aristotle Funds and Champlain Small go up and down completely randomly.

Pair Corralation between Aristotle Funds and Champlain Small

Assuming the 90 days horizon Aristotle Funds Series is expected to under-perform the Champlain Small. But the mutual fund apears to be less risky and, when comparing its historical volatility, Aristotle Funds Series is 1.28 times less risky than Champlain Small. The mutual fund trades about -0.37 of its potential returns per unit of risk. The Champlain Small is currently generating about -0.22 of returns per unit of risk over similar time horizon. If you would invest  2,582  in Champlain Small on September 25, 2024 and sell it today you would lose (290.00) from holding Champlain Small or give up 11.23% of portfolio value over 90 days.

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

Aristotle Funds Series  vs.  Champlain Small

Aristotle Funds Series

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aristotle Funds Series has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Champlain Small

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Aristotle Funds and Champlain Small

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

The idea behind Aristotle Funds Series and Champlain Small 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.