Correlation Between Artisan Small and Acr Multi

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

Diversification Opportunities for Artisan Small and Acr Multi

0.51

Correlation Coefficient

Artisan Small  Acr Multi

Very weak diversification

The 3 months correlation between Artisan and Acr is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Artisan Small Cap and Acr Multi Strategy Quality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acr Multi Strategy 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 Acr Multi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acr Multi Strategy has no effect on the direction of Artisan Small i.e., Artisan Small and Acr Multi go up and down completely randomly.

Pair Corralation between Artisan Small and Acr Multi

Assuming the 90 days horizon Artisan Small Cap is expected to generate 1.67 times more return on investment than Acr Multi. However, Artisan Small is 1.67 times more volatile than Acr Multi Strategy Quality. It trades about -0.01 of its potential returns per unit of risk. Acr Multi Strategy Quality is currently generating about -0.13 per unit of risk. If you would invest  3,618  in Artisan Small Cap on October 1, 2024 and sell it today you would lose (42.00) from holding Artisan Small Cap or give up 1.16% of portfolio value over 90 days.

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

Artisan Small Cap  vs.  Acr Multi Strategy Quality

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.

Acr Multi Strategy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Acr Multi Strategy Quality has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Artisan Small and Acr Multi

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

The idea behind Artisan Small Cap and Acr Multi Strategy Quality 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.