Correlation Between Artisan Select and Vanguard Mid

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

Diversification Opportunities for Artisan Select and Vanguard Mid

0.9

Correlation Coefficient

Artisan Select  Vanguard Mid

Almost no diversification

The 3 months correlation between Artisan and Vanguard is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Artisan Select Equity and Vanguard Mid Cap Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Mid Cap 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 Vanguard Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Mid Cap has no effect on the direction of Artisan Select i.e., Artisan Select and Vanguard Mid go up and down completely randomly.

Pair Corralation between Artisan Select and Vanguard Mid

Assuming the 90 days horizon Artisan Select Equity is expected to generate 0.97 times more return on investment than Vanguard Mid. However, Artisan Select Equity is 1.03 times less risky than Vanguard Mid. It trades about -0.02 of its potential returns per unit of risk. Vanguard Mid Cap Value is currently generating about -0.04 per unit of risk. If you would invest  1,558  in Artisan Select Equity on September 23, 2024 and sell it today you would lose (18.00) from holding Artisan Select Equity or give up 1.16% of portfolio value over 90 days.

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

Artisan Select Equity  vs.  Vanguard Mid Cap Value

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.

Vanguard Mid Cap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vanguard Mid Cap Value has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Vanguard Mid 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 Vanguard Mid

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

The idea behind Artisan Select Equity and Vanguard Mid Cap Value 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.