Correlation Between Artisan Focus and Artisan Select

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

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

Diversification Opportunities for Artisan Focus and Artisan Select

0.85

Correlation Coefficient

Artisan Focus  Artisan Select

Very poor diversification

The 3 months correlation between Artisan and Artisan is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Artisan Focus and Artisan Select Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Artisan Select Equity and Artisan Focus 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 Focus are associated (or correlated) with Artisan Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Artisan Select Equity has no effect on the direction of Artisan Focus i.e., Artisan Focus and Artisan Select go up and down completely randomly.

Pair Corralation between Artisan Focus and Artisan Select

Assuming the 90 days horizon Artisan Focus is expected to generate 1.4 times more return on investment than Artisan Select. However, Artisan Focus is 1.4 times more volatile than Artisan Select Equity. It trades about 0.22 of its potential returns per unit of risk. Artisan Select Equity is currently generating about 0.15 per unit of risk. If you would invest  2,222  in Artisan Focus on September 5, 2024 and sell it today you would earn a total of  304.00  from holding Artisan Focus or generate 13.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.44%
Values	Daily Returns

Artisan Focus  vs.  Artisan Select Equity

Artisan Focus

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Artisan Focus 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 Focus showed solid returns over the last few months and may actually be approaching a breakup point.

Artisan Select Equity

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Artisan Select Equity are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Artisan Select may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Artisan Focus and Artisan Select

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

The idea behind Artisan Focus and Artisan Select 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.