Correlation Between Pacific Funds and Aristotle International

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

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

Diversification Opportunities for Pacific Funds and Aristotle International

0.77

Correlation Coefficient

Pacific Funds  Aristotle International

Poor diversification

The 3 months correlation between Pacific and Aristotle is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Pacific Funds Esg and Aristotle International Eq in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aristotle International and Pacific Funds 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 Pacific Funds Esg are associated (or correlated) with Aristotle International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aristotle International has no effect on the direction of Pacific Funds i.e., Pacific Funds and Aristotle International go up and down completely randomly.

Pair Corralation between Pacific Funds and Aristotle International

Assuming the 90 days horizon Pacific Funds is expected to generate 1.39 times less return on investment than Aristotle International. But when comparing it to its historical volatility, Pacific Funds Esg is 2.0 times less risky than Aristotle International. It trades about 0.05 of its potential returns per unit of risk. Aristotle International Eq is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  988.00  in Aristotle International Eq on September 21, 2024 and sell it today you would earn a total of  56.00  from holding Aristotle International Eq or generate 5.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	49.49%
Values	Daily Returns

Pacific Funds Esg  vs.  Aristotle International Eq

Pacific Funds Esg

Risk-Adjusted Performance

0 of 100

Very Weak

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

Aristotle International

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Pacific Funds and Aristotle International

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

The idea behind Pacific Funds Esg and Aristotle International 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.