Correlation Between Snap and Aristotle Funds
Can any of the company-specific risk be diversified away by investing in both Snap 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 Snap and Aristotle Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and Aristotle Funds Series, you can compare the effects of market volatilities on Snap 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 Snap with a short position of Aristotle Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and Aristotle Funds.
Diversification Opportunities for Snap and Aristotle Funds
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Snap and Aristotle is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc 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 Snap 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 Snap Inc 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 Snap i.e., Snap and Aristotle Funds go up and down completely randomly.
Pair Corralation between Snap and Aristotle Funds
Given the investment horizon of 90 days Snap Inc is expected to generate 4.52 times more return on investment than Aristotle Funds. However, Snap is 4.52 times more volatile than Aristotle Funds Series. It trades about 0.03 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 945.00 in Snap Inc on August 30, 2024 and sell it today you would earn a total of 216.00 from holding Snap Inc or generate 22.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 82.63% |
| Values | Daily Returns |
Snap Inc vs. Aristotle Funds Series
Performance |
| Timeline |
| Snap Inc |
| Aristotle Funds Series |
Snap and Aristotle Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and Aristotle Funds
The main advantage of trading using opposite Snap and Aristotle Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap 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 Snap Inc 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.| Aristotle Funds vs. Growth Fund Of | Aristotle Funds vs. HUMANA INC | Aristotle Funds vs. Aquagold International | Aristotle Funds vs. Barloworld Ltd ADR |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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