Correlation Between Dow Jones and Aristotle Funds
Can any of the company-specific risk be diversified away by investing in both Dow Jones 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 Dow Jones and Aristotle Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and Aristotle Funds Series, you can compare the effects of market volatilities on Dow Jones 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 Dow Jones with a short position of Aristotle Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Aristotle Funds.
Diversification Opportunities for Dow Jones and Aristotle Funds
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dow and Aristotle is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial 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 Dow Jones 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 Dow Jones Industrial 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 Dow Jones i.e., Dow Jones and Aristotle Funds go up and down completely randomly.
Pair Corralation between Dow Jones and Aristotle Funds
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.69 times more return on investment than Aristotle Funds. However, Dow Jones Industrial is 1.45 times less risky than Aristotle Funds. It trades about 0.16 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 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 |
Dow Jones Industrial vs. Aristotle Funds Series
Performance |
| Timeline |
Dow Jones and Aristotle Funds Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Aristotle Funds Series
Pair trading matchups for Aristotle Funds
Pair Trading with Dow Jones and Aristotle Funds
The main advantage of trading using opposite Dow Jones and Aristotle Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones 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.| Dow Jones vs. Kaltura | Dow Jones vs. Artisan Partners Asset | Dow Jones vs. US Global Investors | Dow Jones vs. Analog Devices |
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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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