Correlation Between Artisan Small and Gateway Fund

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

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

Diversification Opportunities for Artisan Small and Gateway Fund

0.66

Correlation Coefficient

Artisan Small  Gateway Fund

Poor diversification

The 3 months correlation between Artisan and Gateway is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Artisan Small Cap and Gateway Fund Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gateway Fund Class and Artisan Small 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 Small Cap are associated (or correlated) with Gateway Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gateway Fund Class has no effect on the direction of Artisan Small i.e., Artisan Small and Gateway Fund go up and down completely randomly.

Pair Corralation between Artisan Small and Gateway Fund

Assuming the 90 days horizon Artisan Small Cap is expected to under-perform the Gateway Fund. In addition to that, Artisan Small is 2.96 times more volatile than Gateway Fund Class. It trades about -0.03 of its total potential returns per unit of risk. Gateway Fund Class is currently generating about 0.13 per unit of volatility. If you would invest  4,532  in Gateway Fund Class on September 26, 2024 and sell it today you would earn a total of  138.00  from holding Gateway Fund Class or generate 3.05% return on investment over 90 days.

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

Artisan Small Cap  vs.  Gateway Fund Class

Artisan Small Cap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Artisan Small Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Artisan Small is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Gateway Fund Class

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Gateway Fund Class are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Gateway Fund 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 Small and Gateway Fund

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

The idea behind Artisan Small Cap and Gateway Fund Class 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.