Correlation Between Aristotle/saul Global and Aristotle Value

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

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

Diversification Opportunities for Aristotle/saul Global and Aristotle Value

0.72

Correlation Coefficient

Aristotle/saul Global  Aristotle Value

Poor diversification

The 3 months correlation between Aristotle/saul and Aristotle is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Aristotlesaul Global Eq 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 Aristotle/saul Global 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 Aristotlesaul Global Eq 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 Aristotle/saul Global i.e., Aristotle/saul Global and Aristotle Value go up and down completely randomly.

Pair Corralation between Aristotle/saul Global and Aristotle Value

Assuming the 90 days horizon Aristotlesaul Global Eq is expected to generate 0.67 times more return on investment than Aristotle Value. However, Aristotlesaul Global Eq is 1.5 times less risky than Aristotle Value. It trades about -0.5 of its potential returns per unit of risk. Aristotle Value Eq is currently generating about -0.41 per unit of risk. If you would invest  1,172  in Aristotlesaul Global Eq on October 6, 2024 and sell it today you would lose (89.00) from holding Aristotlesaul Global Eq or give up 7.59% of portfolio value over 90 days.

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

Aristotlesaul Global Eq  vs.  Aristotle Value Eq

Aristotle/saul Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aristotlesaul Global Eq has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing 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 Aristotle/saul Global and Aristotle Value

The main advantage of trading using opposite Aristotle/saul Global and Aristotle Value positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aristotle/saul Global 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 Aristotlesaul Global Eq 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..