Correlation Between Davis Global and Artisan Global

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

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

Diversification Opportunities for Davis Global and Artisan Global

0.79

Correlation Coefficient

Davis Global  Artisan Global

Poor diversification

The 3 months correlation between DAVIS and Artisan is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Davis Global Fund and Artisan Global Unconstrained in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Artisan Global Uncon and Davis Global 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 Davis Global Fund are associated (or correlated) with Artisan Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Artisan Global Uncon has no effect on the direction of Davis Global i.e., Davis Global and Artisan Global go up and down completely randomly.

Pair Corralation between Davis Global and Artisan Global

Assuming the 90 days horizon Davis Global Fund is expected to generate 9.84 times more return on investment than Artisan Global. However, Davis Global is 9.84 times more volatile than Artisan Global Unconstrained. It trades about 0.16 of its potential returns per unit of risk. Artisan Global Unconstrained is currently generating about 0.24 per unit of risk. If you would invest  2,562  in Davis Global Fund on September 4, 2024 and sell it today you would earn a total of  337.00  from holding Davis Global Fund or generate 13.15% return on investment over 90 days.

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

Davis Global Fund  vs.  Artisan Global Unconstrained

Davis Global

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Davis Global Fund are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Davis Global showed solid returns over the last few months and may actually be approaching a breakup point.

Artisan Global Uncon

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Artisan Global Unconstrained are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Artisan Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Davis Global and Artisan Global

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

The idea behind Davis Global Fund and Artisan Global Unconstrained 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.