Correlation Between Aristotle International and Qs Large

Can any of the company-specific risk be diversified away by investing in both Aristotle International and Qs Large 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 International and Qs Large into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aristotle International Equity and Qs Large Cap, you can compare the effects of market volatilities on Aristotle International and Qs Large 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 International with a short position of Qs Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aristotle International and Qs Large.

Diversification Opportunities for Aristotle International and Qs Large

-0.32

Correlation Coefficient

Aristotle International  Qs Large

Very good diversification

The 3 months correlation between Aristotle and LMISX is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Aristotle International Equity and Qs Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qs Large Cap and Aristotle International 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 International Equity are associated (or correlated) with Qs Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qs Large Cap has no effect on the direction of Aristotle International i.e., Aristotle International and Qs Large go up and down completely randomly.

Pair Corralation between Aristotle International and Qs Large

Assuming the 90 days horizon Aristotle International Equity is expected to under-perform the Qs Large. But the mutual fund apears to be less risky and, when comparing its historical volatility, Aristotle International Equity is 1.46 times less risky than Qs Large. The mutual fund trades about -0.18 of its potential returns per unit of risk. The Qs Large Cap is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  2,394  in Qs Large Cap on October 1, 2024 and sell it today you would earn a total of  77.00  from holding Qs Large Cap or generate 3.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Aristotle International Equity  vs.  Qs Large Cap

Aristotle International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aristotle International Equity has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Qs Large Cap

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Qs Large Cap are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Qs Large is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Aristotle International and Qs Large

The main advantage of trading using opposite Aristotle International and Qs Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aristotle International position performs unexpectedly, Qs Large 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 Qs Large will offset losses from the drop in Qs Large's long position.

The idea behind Aristotle International Equity and Qs Large Cap 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.

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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.