Correlation Between Artisan Partners and Stepan

Can any of the company-specific risk be diversified away by investing in both Artisan Partners and Stepan 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 Stepan 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 Stepan Company, you can compare the effects of market volatilities on Artisan Partners and Stepan 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 Stepan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Artisan Partners and Stepan.

Diversification Opportunities for Artisan Partners and Stepan

0.12

Correlation Coefficient

Artisan Partners  Stepan

Average diversification

The 3 months correlation between Artisan and Stepan is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Artisan Partners Asset and Stepan Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stepan Company 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 Stepan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stepan Company has no effect on the direction of Artisan Partners i.e., Artisan Partners and Stepan go up and down completely randomly.

Pair Corralation between Artisan Partners and Stepan

Given the investment horizon of 90 days Artisan Partners Asset is expected to generate 1.04 times more return on investment than Stepan. However, Artisan Partners is 1.04 times more volatile than Stepan Company. It trades about 0.05 of its potential returns per unit of risk. Stepan Company is currently generating about -0.03 per unit of risk. If you would invest  3,460  in Artisan Partners Asset on September 21, 2024 and sell it today you would earn a total of  856.00  from holding Artisan Partners Asset or generate 24.74% return on investment over 90 days.

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

Artisan Partners Asset  vs.  Stepan Company

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 latest stock price disarray, may contribute to short-term losses for the investors.

Stepan Company

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stepan Company has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Artisan Partners and Stepan

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

The idea behind Artisan Partners Asset and Stepan Company 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..