Correlation Between Profunds Ultrashort and Aristotle Funds

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

By analyzing existing cross correlation between Profunds Ultrashort Nasdaq 100 and Aristotle Funds Series, you can compare the effects of market volatilities on Profunds Ultrashort 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 Profunds Ultrashort with a short position of Aristotle Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Profunds Ultrashort and Aristotle Funds.

Diversification Opportunities for Profunds Ultrashort and Aristotle Funds

-0.88

Correlation Coefficient

Profunds Ultrashort  Aristotle Funds

Pay attention - limited upside

The 3 months correlation between Profunds and Aristotle is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Profunds Ultrashort Nasdaq 100 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 Profunds Ultrashort 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 Profunds Ultrashort Nasdaq 100 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 Profunds Ultrashort i.e., Profunds Ultrashort and Aristotle Funds go up and down completely randomly.

Pair Corralation between Profunds Ultrashort and Aristotle Funds

Assuming the 90 days horizon Profunds Ultrashort Nasdaq 100 is expected to under-perform the Aristotle Funds. In addition to that, Profunds Ultrashort is 2.41 times more volatile than Aristotle Funds Series. It trades about -0.16 of its total potential returns per unit of risk. Aristotle Funds Series is currently generating about 0.12 per unit of volatility. If you would invest  1,402  in Aristotle Funds Series on September 19, 2024 and sell it today you would earn a total of  85.00  from holding Aristotle Funds Series or generate 6.06% return on investment over 90 days.

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

Profunds Ultrashort Nasdaq 100  vs.  Aristotle Funds Series

Profunds Ultrashort

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Profunds Ultrashort Nasdaq 100 has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's forward indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Aristotle Funds Series

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aristotle Funds Series are ranked lower than 9 (%) 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.

Pair Trading with Profunds Ultrashort and Aristotle Funds

The main advantage of trading using opposite Profunds Ultrashort and Aristotle Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Profunds Ultrashort 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 Profunds Ultrashort Nasdaq 100 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.

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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.