Correlation Between Df Dent and Aristotle Growth

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

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

Diversification Opportunities for Df Dent and Aristotle Growth

0.71

Correlation Coefficient

Df Dent  Aristotle Growth

Poor diversification

The 3 months correlation between DFDSX and Aristotle is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Df Dent Small and Aristotle Growth Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aristotle Growth Equity and Df Dent 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 Df Dent Small are associated (or correlated) with Aristotle Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aristotle Growth Equity has no effect on the direction of Df Dent i.e., Df Dent and Aristotle Growth go up and down completely randomly.

Pair Corralation between Df Dent and Aristotle Growth

Assuming the 90 days horizon Df Dent Small is expected to under-perform the Aristotle Growth. But the mutual fund apears to be less risky and, when comparing its historical volatility, Df Dent Small is 2.21 times less risky than Aristotle Growth. The mutual fund trades about -0.36 of its potential returns per unit of risk. The Aristotle Growth Equity is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest  1,643  in Aristotle Growth Equity on September 27, 2024 and sell it today you would lose (81.00) from holding Aristotle Growth Equity or give up 4.93% of portfolio value over 90 days.

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

Df Dent Small  vs.  Aristotle Growth Equity

Df Dent Small

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Df Dent Small are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Df Dent is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Aristotle Growth Equity

Risk-Adjusted Performance

2 of 100

Weak

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

Pair Trading with Df Dent and Aristotle Growth

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

The idea behind Df Dent Small and Aristotle Growth Equity 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.