Correlation Between Ariel Appreciation and Domini Impact

Can any of the company-specific risk be diversified away by investing in both Ariel Appreciation and Domini Impact 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 Domini Impact 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 Domini Impact Bond, you can compare the effects of market volatilities on Ariel Appreciation and Domini Impact 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 Domini Impact. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ariel Appreciation and Domini Impact.

Diversification Opportunities for Ariel Appreciation and Domini Impact

-0.73

Correlation Coefficient

Ariel Appreciation  Domini Impact

Pay attention - limited upside

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

Pair Corralation between Ariel Appreciation and Domini Impact

Assuming the 90 days horizon Ariel Appreciation Fund is expected to generate 3.31 times more return on investment than Domini Impact. However, Ariel Appreciation is 3.31 times more volatile than Domini Impact Bond. It trades about 0.16 of its potential returns per unit of risk. Domini Impact Bond is currently generating about -0.11 per unit of risk. If you would invest  4,044  in Ariel Appreciation Fund on September 5, 2024 and sell it today you would earn a total of  435.00  from holding Ariel Appreciation Fund or generate 10.76% return on investment over 90 days.

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

Ariel Appreciation Fund  vs.  Domini Impact Bond

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 basic indicators, Ariel Appreciation may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Domini Impact Bond

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Ariel Appreciation and Domini Impact

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

The idea behind Ariel Appreciation Fund and Domini Impact Bond 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.