Correlation Between Artisan Partners and Signature Bank

Can any of the company-specific risk be diversified away by investing in both Artisan Partners and Signature Bank 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 Artisan Partners and Signature Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Artisan Partners Asset and Signature Bank, you can compare the effects of market volatilities on Artisan Partners and Signature Bank 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 Artisan Partners with a short position of Signature Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Artisan Partners and Signature Bank.

Diversification Opportunities for Artisan Partners and Signature Bank

-0.72

Correlation Coefficient

Artisan Partners  Signature Bank

Pay attention - limited upside

The 3 months correlation between Artisan and Signature is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Artisan Partners Asset and Signature Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Signature Bank and Artisan Partners 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 Artisan Partners Asset are associated (or correlated) with Signature Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Signature Bank has no effect on the direction of Artisan Partners i.e., Artisan Partners and Signature Bank go up and down completely randomly.

Pair Corralation between Artisan Partners and Signature Bank

Given the investment horizon of 90 days Artisan Partners is expected to generate 44.13 times less return on investment than Signature Bank. But when comparing it to its historical volatility, Artisan Partners Asset is 18.64 times less risky than Signature Bank. It trades about 0.05 of its potential returns per unit of risk. Signature Bank is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  1,771  in Signature Bank on September 29, 2024 and sell it today you would lose (1,769) from holding Signature Bank or give up 99.9% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	23.95%
Values	Daily Returns

Artisan Partners Asset  vs.  Signature Bank

Artisan Partners Asset

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Artisan Partners Asset are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Artisan Partners is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Signature Bank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Signature Bank has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Signature Bank is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Artisan Partners and Signature Bank

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

The idea behind Artisan Partners Asset and Signature Bank 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.