Correlation Between Wilmington Intermediate and Aristotle Funds

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

By analyzing existing cross correlation between Wilmington Intermediate Term Bond and Aristotle Funds Series, you can compare the effects of market volatilities on Wilmington Intermediate 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 Wilmington Intermediate with a short position of Aristotle Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wilmington Intermediate and Aristotle Funds.

Diversification Opportunities for Wilmington Intermediate and Aristotle Funds

-0.4

Correlation Coefficient

Wilmington Intermediate  Aristotle Funds

Very good diversification

The 3 months correlation between Wilmington and Aristotle is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Wilmington Intermediate Term B 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 Wilmington Intermediate 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 Wilmington Intermediate Term Bond 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 Wilmington Intermediate i.e., Wilmington Intermediate and Aristotle Funds go up and down completely randomly.

Pair Corralation between Wilmington Intermediate and Aristotle Funds

Assuming the 90 days horizon Wilmington Intermediate Term Bond is expected to under-perform the Aristotle Funds. But the mutual fund apears to be less risky and, when comparing its historical volatility, Wilmington Intermediate Term Bond is 1.5 times less risky than Aristotle Funds. The mutual fund trades about -0.06 of its potential returns per unit of risk. The Aristotle Funds Series is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,595  in Aristotle Funds Series on September 19, 2024 and sell it today you would earn a total of  27.00  from holding Aristotle Funds Series or generate 1.69% return on investment over 90 days.

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

Wilmington Intermediate Term B  vs.  Aristotle Funds Series

Wilmington Intermediate

Risk-Adjusted Performance

0 of 100

Very Weak

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

Aristotle Funds Series

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Aristotle Funds Series are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental drivers, Aristotle Funds is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Wilmington Intermediate and Aristotle Funds

The main advantage of trading using opposite Wilmington Intermediate and Aristotle Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wilmington Intermediate 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 Wilmington Intermediate Term Bond 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.

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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.