Correlation Between Great-west Loomis and Aristotle Funds

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

By analyzing existing cross correlation between Great West Loomis Sayles and Aristotle Funds Series, you can compare the effects of market volatilities on Great-west Loomis and Aristotle Funds 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 Great-west Loomis with a short position of Aristotle Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great-west Loomis and Aristotle Funds.

Diversification Opportunities for Great-west Loomis and Aristotle Funds

0.98

Correlation Coefficient

Great-west Loomis  Aristotle Funds

Almost no diversification

The 3 months correlation between Great-west and Aristotle is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Great West Loomis Sayles and Aristotle Funds Series in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aristotle Funds Series and Great-west Loomis 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 Great West Loomis Sayles are associated (or correlated) with Aristotle Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aristotle Funds Series has no effect on the direction of Great-west Loomis i.e., Great-west Loomis and Aristotle Funds go up and down completely randomly.

Pair Corralation between Great-west Loomis and Aristotle Funds

Assuming the 90 days horizon Great West Loomis Sayles is expected to generate 1.02 times more return on investment than Aristotle Funds. However, Great-west Loomis is 1.02 times more volatile than Aristotle Funds Series. It trades about -0.1 of its potential returns per unit of risk. Aristotle Funds Series is currently generating about -0.11 per unit of risk. If you would invest  3,857  in Great West Loomis Sayles on December 23, 2024 and sell it today you would lose (243.00) from holding Great West Loomis Sayles or give up 6.3% of portfolio value over 90 days.

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

Great West Loomis Sayles  vs.  Aristotle Funds Series

Great West Loomis

Risk-Adjusted Performance

Very Weak

Over the last 90 days Great West Loomis Sayles 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.

Aristotle Funds Series

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aristotle Funds Series has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's fundamental drivers 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 Great-west Loomis and Aristotle Funds

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

The idea behind Great West Loomis Sayles and Aristotle Funds Series 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.