Correlation Between Guidepath(r) Managed and Aristotle Value

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

By analyzing existing cross correlation between Guidepath Managed Futures and Aristotle Value Equity, you can compare the effects of market volatilities on Guidepath(r) Managed 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 Guidepath(r) Managed with a short position of Aristotle Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guidepath(r) Managed and Aristotle Value.

Diversification Opportunities for Guidepath(r) Managed and Aristotle Value

-0.42

Correlation Coefficient

Guidepath(r) Managed  Aristotle Value

Very good diversification

The 3 months correlation between Guidepath(r) and Aristotle is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Guidepath Managed Futures and Aristotle Value Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aristotle Value Equity and Guidepath(r) Managed 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 Guidepath Managed Futures 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 Equity has no effect on the direction of Guidepath(r) Managed i.e., Guidepath(r) Managed and Aristotle Value go up and down completely randomly.

Pair Corralation between Guidepath(r) Managed and Aristotle Value

Assuming the 90 days horizon Guidepath Managed Futures is expected to generate 0.5 times more return on investment than Aristotle Value. However, Guidepath Managed Futures is 2.02 times less risky than Aristotle Value. It trades about 0.2 of its potential returns per unit of risk. Aristotle Value Equity is currently generating about -0.38 per unit of risk. If you would invest  791.00  in Guidepath Managed Futures on October 14, 2024 and sell it today you would earn a total of  15.00  from holding Guidepath Managed Futures or generate 1.9% return on investment over 90 days.

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

Guidepath Managed Futures  vs.  Aristotle Value Equity

Guidepath Managed Futures

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Guidepath Managed Futures are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Guidepath(r) Managed is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Aristotle Value Equity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aristotle Value Equity 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 Guidepath(r) Managed and Aristotle Value

The main advantage of trading using opposite Guidepath(r) Managed and Aristotle Value positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guidepath(r) Managed 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 Guidepath Managed Futures and Aristotle Value Equity 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..