Correlation Between Western Assets and Aristotle Funds
Can any of the company-specific risk be diversified away by investing in both Western Assets 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 Western Assets and Aristotle Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Assets Emerging and Aristotle Funds Series, you can compare the effects of market volatilities on Western Assets 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 Western Assets with a short position of Aristotle Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Assets and Aristotle Funds.
Diversification Opportunities for Western Assets and Aristotle Funds
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Western and Aristotle is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Western Assets Emerging 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 Western Assets 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 Western Assets Emerging 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 Western Assets i.e., Western Assets and Aristotle Funds go up and down completely randomly.
Pair Corralation between Western Assets and Aristotle Funds
Assuming the 90 days horizon Western Assets is expected to generate 2.97 times less return on investment than Aristotle Funds. But when comparing it to its historical volatility, Western Assets Emerging is 2.59 times less risky than Aristotle Funds. It trades about 0.09 of its potential returns per unit of risk. Aristotle Funds Series is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 787.00 in Aristotle Funds Series on August 30, 2024 and sell it today you would earn a total of 259.00 from holding Aristotle Funds Series or generate 32.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 50.71% |
| Values | Daily Returns |
Western Assets Emerging vs. Aristotle Funds Series
Performance |
| Timeline |
| Western Assets Emerging |
| Aristotle Funds Series |
Western Assets and Aristotle Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Assets and Aristotle Funds
The main advantage of trading using opposite Western Assets and Aristotle Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Assets 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.| Western Assets vs. Vanguard High Yield Tax Exempt | Western Assets vs. Victory High Yield | Western Assets vs. Artisan High Income | Western Assets vs. Blrc Sgy Mnp |
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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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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