Correlation Between Artisan Value and Cambiar Small

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

Diversification Opportunities for Artisan Value and Cambiar Small

0.96

Correlation Coefficient

Artisan Value  Cambiar Small

Almost no diversification

The 3 months correlation between Artisan and Cambiar is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Artisan Value Fund and Cambiar Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cambiar Small Cap 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 Cambiar Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cambiar Small Cap has no effect on the direction of Artisan Value i.e., Artisan Value and Cambiar Small go up and down completely randomly.

Pair Corralation between Artisan Value and Cambiar Small

Assuming the 90 days horizon Artisan Value is expected to generate 1.68 times less return on investment than Cambiar Small. But when comparing it to its historical volatility, Artisan Value Fund is 1.68 times less risky than Cambiar Small. It trades about 0.15 of its potential returns per unit of risk. Cambiar Small Cap is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  1,641  in Cambiar Small Cap on September 2, 2024 and sell it today you would earn a total of  176.00  from holding Cambiar Small Cap or generate 10.73% return on investment over 90 days.

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

Artisan Value Fund  vs.  Cambiar Small Cap

Artisan Value

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Artisan Value Fund are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong essential indicators, Artisan Value is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Cambiar Small Cap

Risk-Adjusted Performance

12 of 100

Good

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

Pair Trading with Artisan Value and Cambiar Small

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

The idea behind Artisan Value Fund and Cambiar Small Cap 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.