Correlation Between Aristotlesaul Global and Smallcap Growth

Can any of the company-specific risk be diversified away by investing in both Aristotlesaul Global and Smallcap Growth 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 Aristotlesaul Global and Smallcap Growth 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 Smallcap Growth Fund, you can compare the effects of market volatilities on Aristotlesaul Global and Smallcap Growth 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 Aristotlesaul Global with a short position of Smallcap Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aristotlesaul Global and Smallcap Growth.

Diversification Opportunities for Aristotlesaul Global and Smallcap Growth

0.39

Correlation Coefficient

Aristotlesaul Global  Smallcap Growth

Weak diversification

The 3 months correlation between Aristotlesaul and Smallcap is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Aristotlesaul Global Eq and Smallcap Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smallcap Growth and Aristotlesaul 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 Smallcap Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smallcap Growth has no effect on the direction of Aristotlesaul Global i.e., Aristotlesaul Global and Smallcap Growth go up and down completely randomly.

Pair Corralation between Aristotlesaul Global and Smallcap Growth

Assuming the 90 days horizon Aristotlesaul Global Eq is expected to under-perform the Smallcap Growth. In addition to that, Aristotlesaul Global is 1.53 times more volatile than Smallcap Growth Fund. It trades about -0.07 of its total potential returns per unit of risk. Smallcap Growth Fund is currently generating about 0.03 per unit of volatility. If you would invest  1,439  in Smallcap Growth Fund on October 9, 2024 and sell it today you would earn a total of  81.00  from holding Smallcap Growth Fund or generate 5.63% return on investment over 90 days.

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

Aristotlesaul Global Eq  vs.  Smallcap Growth Fund

Aristotlesaul 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.

Smallcap Growth

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Aristotlesaul Global and Smallcap Growth

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

The idea behind Aristotlesaul Global Eq and Smallcap Growth 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.

Check out your portfolio center.

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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.