Correlation Between Nasdaq and Aristotle Funds

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Can any of the company-specific risk be diversified away by investing in both Nasdaq 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 Nasdaq and Aristotle Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nasdaq Inc and Aristotle Funds Series, you can compare the effects of market volatilities on Nasdaq 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 Nasdaq with a short position of Aristotle Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq and Aristotle Funds.

Diversification Opportunities for Nasdaq and Aristotle Funds

NasdaqAristotleDiversified AwayNasdaqAristotleDiversified Away100%
0.9
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Nasdaq and Aristotle is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc 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 Nasdaq 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 Nasdaq Inc 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 Nasdaq i.e., Nasdaq and Aristotle Funds go up and down completely randomly.

Pair Corralation between Nasdaq and Aristotle Funds

Given the investment horizon of 90 days Nasdaq Inc is expected to generate 1.15 times more return on investment than Aristotle Funds. However, Nasdaq is 1.15 times more volatile than Aristotle Funds Series. It trades about 0.08 of its potential returns per unit of risk. Aristotle Funds Series is currently generating about 0.06 per unit of risk. If you would invest  7,379  in Nasdaq Inc on September 23, 2024 and sell it today you would earn a total of  391.00  from holding Nasdaq Inc or generate 5.3% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Nasdaq Inc  vs.  Aristotle Funds Series

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec -50510
JavaScript chart by amCharts 3.21.15NDAQ AILLX
       Timeline  
Nasdaq Inc 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Nasdaq is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec72747678808284
Aristotle Funds Series 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Aristotle Funds Series are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong essential indicators, Aristotle Funds is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec2525.52626.527

Nasdaq and Aristotle Funds Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-3.17-2.37-1.58-0.780.00.791.612.443.274.09 0.10.20.30.40.5
JavaScript chart by amCharts 3.21.15NDAQ AILLX
       Returns  

Pair Trading with Nasdaq and Aristotle Funds

The main advantage of trading using opposite Nasdaq and Aristotle Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq 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 Nasdaq Inc 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.

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