Correlation Between Aristotle International and Wilmington Intermediate

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

By analyzing existing cross correlation between Aristotle International Eq and Wilmington Intermediate Term Bond, you can compare the effects of market volatilities on Aristotle International and Wilmington Intermediate 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 International with a short position of Wilmington Intermediate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aristotle International and Wilmington Intermediate.

Diversification Opportunities for Aristotle International and Wilmington Intermediate

1.0

Correlation Coefficient

Aristotle International  Wilmington Intermediate

No risk reduction

The 3 months correlation between Aristotle and Wilmington is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Aristotle International Eq and Wilmington Intermediate Term B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wilmington Intermediate and Aristotle International 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 International Eq are associated (or correlated) with Wilmington Intermediate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wilmington Intermediate has no effect on the direction of Aristotle International i.e., Aristotle International and Wilmington Intermediate go up and down completely randomly.

Pair Corralation between Aristotle International and Wilmington Intermediate

Assuming the 90 days horizon Aristotle International is expected to generate 1.37 times less return on investment than Wilmington Intermediate. But when comparing it to its historical volatility, Aristotle International Eq is 1.01 times less risky than Wilmington Intermediate. It trades about 0.03 of its potential returns per unit of risk. Wilmington Intermediate Term Bond is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,004  in Wilmington Intermediate Term Bond on September 30, 2024 and sell it today you would earn a total of  107.00  from holding Wilmington Intermediate Term Bond or generate 10.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	61.52%
Values	Daily Returns

Aristotle International Eq  vs.  Wilmington Intermediate Term B

Aristotle International

Risk-Adjusted Performance

0 of 100

Very Weak

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

Wilmington Intermediate

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Aristotle International and Wilmington Intermediate

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

The idea behind Aristotle International Eq and Wilmington Intermediate Term Bond 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.