Correlation Between Aristotle International and Aristotle Value

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

By analyzing existing cross correlation between Aristotle International Eq and Aristotle Value Eq, you can compare the effects of market volatilities on Aristotle International and Aristotle Value 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 Aristotle Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aristotle International and Aristotle Value.

Diversification Opportunities for Aristotle International and Aristotle Value

-0.17

Correlation Coefficient

Aristotle International  Aristotle Value

Good diversification

The 3 months correlation between Aristotle and Aristotle is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Aristotle International Eq and Aristotle Value Eq in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aristotle Value Eq 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 Eq are associated (or correlated) with Aristotle Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aristotle Value Eq has no effect on the direction of Aristotle International i.e., Aristotle International and Aristotle Value go up and down completely randomly.

Pair Corralation between Aristotle International and Aristotle Value

Assuming the 90 days horizon Aristotle International Eq is expected to generate 1.0 times more return on investment than Aristotle Value. However, Aristotle International is 1.0 times more volatile than Aristotle Value Eq. It trades about -0.07 of its potential returns per unit of risk. Aristotle Value Eq is currently generating about -0.08 per unit of risk. If you would invest  1,107  in Aristotle International Eq on September 19, 2024 and sell it today you would lose (35.00) from holding Aristotle International Eq or give up 3.16% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Aristotle International Eq  vs.  Aristotle Value Eq

Aristotle International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aristotle International Eq has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Aristotle International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Aristotle Value Eq

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aristotle Value Eq has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Aristotle Value 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 Aristotle Value

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

The idea behind Aristotle International Eq and Aristotle Value Eq 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.