Correlation Between Artisan Select and State Street

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

Diversification Opportunities for Artisan Select and State Street

0.73

Correlation Coefficient

Artisan Select  State Street

Poor diversification

The 3 months correlation between Artisan and State is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Artisan Select Equity and State Street Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Street Equity 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 State Street. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of State Street Equity has no effect on the direction of Artisan Select i.e., Artisan Select and State Street go up and down completely randomly.

Pair Corralation between Artisan Select and State Street

Assuming the 90 days horizon Artisan Select Equity is expected to under-perform the State Street. But the mutual fund apears to be less risky and, when comparing its historical volatility, Artisan Select Equity is 1.12 times less risky than State Street. The mutual fund trades about -0.02 of its potential returns per unit of risk. The State Street Equity is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  43,303  in State Street Equity on September 29, 2024 and sell it today you would earn a total of  1,206  from holding State Street Equity or generate 2.79% return on investment over 90 days.

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

Artisan Select Equity  vs.  State Street Equity

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.

State Street Equity

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in State Street Equity are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, State Street is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Artisan Select and State Street

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

The idea behind Artisan Select Equity and State Street Equity 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 Stocks Directory module to find actively traded stocks across global markets.