Correlation Between Small Cap and Aristotle Funds
Can any of the company-specific risk be diversified away by investing in both Small Cap 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 Small Cap and Aristotle Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Small Cap Stock and Aristotle Funds Series, you can compare the effects of market volatilities on Small Cap 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 Small Cap with a short position of Aristotle Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small Cap and Aristotle Funds.
Diversification Opportunities for Small Cap and Aristotle Funds
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Small and Aristotle is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Small Cap Stock 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 Small Cap 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 Small Cap Stock 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 Small Cap i.e., Small Cap and Aristotle Funds go up and down completely randomly.
Pair Corralation between Small Cap and Aristotle Funds
Assuming the 90 days horizon Small Cap Stock is expected to generate 1.09 times more return on investment than Aristotle Funds. However, Small Cap is 1.09 times more volatile than Aristotle Funds Series. It trades about 0.23 of its potential returns per unit of risk. Aristotle Funds Series is currently generating about 0.21 per unit of risk. If you would invest 1,416 in Small Cap Stock on August 30, 2024 and sell it today you would earn a total of 122.00 from holding Small Cap Stock or generate 8.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Small Cap Stock vs. Aristotle Funds Series
Performance |
| Timeline |
| Small Cap Stock |
| Aristotle Funds Series |
Small Cap and Aristotle Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Small Cap and Aristotle Funds
The main advantage of trading using opposite Small Cap and Aristotle Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Small Cap 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.| Small Cap vs. Franklin Adjustable Government | Small Cap vs. Dreyfus Government Cash | Small Cap vs. Lord Abbett Government | Small Cap vs. Inverse Government Long |
| Aristotle Funds vs. Vanguard Small Cap Index | Aristotle Funds vs. T Rowe Price | Aristotle Funds vs. HUMANA INC | Aristotle Funds vs. Aquagold International |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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