Correlation Between Ariel Appreciation and Ariel Fund

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

By analyzing existing cross correlation between Ariel Appreciation Fund and Ariel Fund Investor, you can compare the effects of market volatilities on Ariel Appreciation and Ariel Fund 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 Ariel Appreciation with a short position of Ariel Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ariel Appreciation and Ariel Fund.

Diversification Opportunities for Ariel Appreciation and Ariel Fund

0.73

Correlation Coefficient

Ariel Appreciation  Ariel Fund

Poor diversification

The 3 months correlation between Ariel and Ariel is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Ariel Appreciation Fund and Ariel Fund Investor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ariel Fund Investor and Ariel Appreciation 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 Ariel Appreciation Fund are associated (or correlated) with Ariel Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ariel Fund Investor has no effect on the direction of Ariel Appreciation i.e., Ariel Appreciation and Ariel Fund go up and down completely randomly.

Pair Corralation between Ariel Appreciation and Ariel Fund

Assuming the 90 days horizon Ariel Appreciation is expected to generate 1.02 times less return on investment than Ariel Fund. In addition to that, Ariel Appreciation is 1.0 times more volatile than Ariel Fund Investor. It trades about 0.16 of its total potential returns per unit of risk. Ariel Fund Investor is currently generating about 0.17 per unit of volatility. If you would invest  7,258  in Ariel Fund Investor on September 12, 2024 and sell it today you would earn a total of  813.00  from holding Ariel Fund Investor or generate 11.2% return on investment over 90 days.

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

Ariel Appreciation Fund  vs.  Ariel Fund Investor

Ariel Appreciation

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ariel Appreciation Fund are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Ariel Appreciation may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Ariel Fund Investor

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ariel Fund Investor are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Ariel Fund may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Ariel Appreciation and Ariel Fund

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

The idea behind Ariel Appreciation Fund and Ariel Fund Investor 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.