Correlation Between Artisan Value and Artisan Developing

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

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

Diversification Opportunities for Artisan Value and Artisan Developing

0.77

Correlation Coefficient

Artisan Value  Artisan Developing

Poor diversification

The 3 months correlation between Artisan and Artisan is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Artisan Value Fund and Artisan Developing World in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Artisan Developing World and Artisan Value 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 Value Fund are associated (or correlated) with Artisan Developing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Artisan Developing World has no effect on the direction of Artisan Value i.e., Artisan Value and Artisan Developing go up and down completely randomly.

Pair Corralation between Artisan Value and Artisan Developing

Assuming the 90 days horizon Artisan Value Fund is expected to generate 0.78 times more return on investment than Artisan Developing. However, Artisan Value Fund is 1.28 times less risky than Artisan Developing. It trades about 0.27 of its potential returns per unit of risk. Artisan Developing World is currently generating about 0.21 per unit of risk. If you would invest  1,553  in Artisan Value Fund on September 6, 2024 and sell it today you would earn a total of  60.00  from holding Artisan Value Fund or generate 3.86% return on investment over 90 days.

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

Artisan Value Fund  vs.  Artisan Developing World

Artisan Value

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Artisan Value Fund are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak essential indicators, Artisan Value may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Artisan Developing World

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Artisan Developing World are ranked lower than 23 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Artisan Developing showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Artisan Value and Artisan Developing

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

The idea behind Artisan Value Fund and Artisan Developing World 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.