Correlation Between Wilmington Intermediate and Aristotle Value

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

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

Diversification Opportunities for Wilmington Intermediate and Aristotle Value

0.4

Correlation Coefficient

Wilmington Intermediate  Aristotle Value

Very weak diversification

The 3 months correlation between Wilmington and Aristotle is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Wilmington Intermediate Term B and Aristotle Value Eq in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aristotle Value Eq and Wilmington Intermediate 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 Wilmington Intermediate Term Bond are associated (or correlated) with Aristotle Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aristotle Value Eq has no effect on the direction of Wilmington Intermediate i.e., Wilmington Intermediate and Aristotle Value go up and down completely randomly.

Pair Corralation between Wilmington Intermediate and Aristotle Value

Assuming the 90 days horizon Wilmington Intermediate Term Bond is expected to generate 0.93 times more return on investment than Aristotle Value. However, Wilmington Intermediate Term Bond is 1.07 times less risky than Aristotle Value. It trades about 0.04 of its potential returns per unit of risk. Aristotle Value Eq is currently generating about 0.02 per unit of risk. 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	Weak
Accuracy	62.25%
Values	Daily Returns

Wilmington Intermediate Term B  vs.  Aristotle Value Eq

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.

Aristotle Value Eq

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aristotle Value Eq has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic 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 Wilmington Intermediate and Aristotle Value

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

The idea behind Wilmington Intermediate Term Bond and Aristotle Value Eq 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.