Correlation Between Vanguard 500 and Aristotle Funds

Can any of the company-specific risk be diversified away by investing in both Vanguard 500 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 Vanguard 500 and Aristotle Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Vanguard 500 Index and Aristotle Funds Series, you can compare the effects of market volatilities on Vanguard 500 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 Vanguard 500 with a short position of Aristotle Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard 500 and Aristotle Funds.

Diversification Opportunities for Vanguard 500 and Aristotle Funds

0.0

Correlation Coefficient

Vanguard 500  Aristotle Funds

Pay attention - limited upside

The 3 months correlation between Vanguard and Aristotle is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard 500 Index 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 Vanguard 500 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 Vanguard 500 Index 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 Vanguard 500 i.e., Vanguard 500 and Aristotle Funds go up and down completely randomly.

Pair Corralation between Vanguard 500 and Aristotle Funds

If you would invest (100.00) in Aristotle Funds Series on March 18, 2024 and sell it today you would earn a total of  100.00  from holding Aristotle Funds Series or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Vanguard 500 Index  vs.  Aristotle Funds Series

Vanguard 500 Index

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vanguard 500 Index 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 basic indicators remain fairly strong which may send shares a bit higher in July 2024. The current disturbance may also be a sign of long term up-swing for the fund investors.

Aristotle Funds Series

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aristotle Funds Series has generated negative risk-adjusted returns adding no value to fund investors. 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 Vanguard 500 and Aristotle Funds

The main advantage of trading using opposite Vanguard 500 and Aristotle Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard 500 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 Vanguard 500 Index 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.