Correlation Between Artisan Thematic and New Perspective

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

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

Diversification Opportunities for Artisan Thematic and New Perspective

0.79

Correlation Coefficient

Artisan Thematic  New Perspective

Poor diversification

The 3 months correlation between Artisan and New is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Artisan Thematic Fund and New Perspective Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Perspective and Artisan Thematic 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 Thematic Fund are associated (or correlated) with New Perspective. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Perspective has no effect on the direction of Artisan Thematic i.e., Artisan Thematic and New Perspective go up and down completely randomly.

Pair Corralation between Artisan Thematic and New Perspective

Assuming the 90 days horizon Artisan Thematic Fund is expected to generate 1.52 times more return on investment than New Perspective. However, Artisan Thematic is 1.52 times more volatile than New Perspective Fund. It trades about 0.39 of its potential returns per unit of risk. New Perspective Fund is currently generating about 0.27 per unit of risk. If you would invest  2,330  in Artisan Thematic Fund on September 5, 2024 and sell it today you would earn a total of  187.00  from holding Artisan Thematic Fund or generate 8.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Artisan Thematic Fund  vs.  New Perspective Fund

Artisan Thematic

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Artisan Thematic Fund are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Artisan Thematic showed solid returns over the last few months and may actually be approaching a breakup point.

New Perspective

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in New Perspective Fund are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental drivers, New Perspective may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Artisan Thematic and New Perspective

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

The idea behind Artisan Thematic Fund and New Perspective Fund 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.

Check out your portfolio center.

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 Transaction History module to view history of all your transactions and understand their impact on performance.