Correlation Between Aristotle Funds and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Aristotle Funds and Dow Jones 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 Funds and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aristotle Funds Series and Dow Jones Industrial, you can compare the effects of market volatilities on Aristotle Funds and Dow Jones 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 Funds with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aristotle Funds and Dow Jones.
Diversification Opportunities for Aristotle Funds and Dow Jones
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Aristotle and Dow is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Aristotle Funds Series and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and Aristotle 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 Aristotle Funds Series are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Aristotle Funds i.e., Aristotle Funds and Dow Jones go up and down completely randomly.
Pair Corralation between Aristotle Funds and Dow Jones
Assuming the 90 days horizon Aristotle Funds is expected to generate 1.01 times less return on investment than Dow Jones. In addition to that, Aristotle Funds is 1.45 times more volatile than Dow Jones Industrial. It trades about 0.11 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.16 per unit of volatility. If you would invest 4,233,015 in Dow Jones Industrial on August 30, 2024 and sell it today you would earn a total of 239,191 from holding Dow Jones Industrial or generate 5.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aristotle Funds Series vs. Dow Jones Industrial
Performance |
| Timeline |
Aristotle Funds and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Aristotle Funds Series
Pair trading matchups for Aristotle Funds
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Aristotle Funds and Dow Jones
The main advantage of trading using opposite Aristotle Funds and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aristotle Funds position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Aristotle Funds vs. Transamerica Cleartrack Retirement | Aristotle Funds vs. Lifestyle Ii Moderate | Aristotle Funds vs. Dimensional Retirement Income | Aristotle Funds vs. Franklin Lifesmart Retirement |
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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