Correlation Between Artisan Select and Rising Rates

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

By analyzing existing cross correlation between Artisan Select Equity and Rising Rates Opportunity, you can compare the effects of market volatilities on Artisan Select and Rising Rates 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 Select with a short position of Rising Rates. Check out your portfolio center. Please also check ongoing floating volatility patterns of Artisan Select and Rising Rates.

Diversification Opportunities for Artisan Select and Rising Rates

0.23

Correlation Coefficient

Artisan Select  Rising Rates

Modest diversification

The 3 months correlation between Artisan and Rising is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Artisan Select Equity and Rising Rates Opportunity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rising Rates Opportunity and Artisan Select 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 Select Equity are associated (or correlated) with Rising Rates. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rising Rates Opportunity has no effect on the direction of Artisan Select i.e., Artisan Select and Rising Rates go up and down completely randomly.

Pair Corralation between Artisan Select and Rising Rates

Assuming the 90 days horizon Artisan Select Equity is expected to under-perform the Rising Rates. But the mutual fund apears to be less risky and, when comparing its historical volatility, Artisan Select Equity is 1.55 times less risky than Rising Rates. The mutual fund trades about -0.03 of its potential returns per unit of risk. The Rising Rates Opportunity is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  3,843  in Rising Rates Opportunity on September 21, 2024 and sell it today you would earn a total of  552.00  from holding Rising Rates Opportunity or generate 14.36% return on investment over 90 days.

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

Artisan Select Equity  vs.  Rising Rates Opportunity

Artisan Select Equity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Artisan Select Equity has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Artisan Select is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Rising Rates Opportunity

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Rising Rates Opportunity are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Rising Rates showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Artisan Select and Rising Rates

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

The idea behind Artisan Select Equity and Rising Rates Opportunity 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.