Correlation Between New Perspective and Artisan Global

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

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

Diversification Opportunities for New Perspective and Artisan Global

0.55

Correlation Coefficient

New Perspective  Artisan Global

Very weak diversification

The 3 months correlation between New and Artisan is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding New Perspective Fund and Artisan Global Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Artisan Global Oppor and New Perspective 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 New Perspective 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 Oppor has no effect on the direction of New Perspective i.e., New Perspective and Artisan Global go up and down completely randomly.

Pair Corralation between New Perspective and Artisan Global

Assuming the 90 days horizon New Perspective Fund is expected to generate 0.63 times more return on investment than Artisan Global. However, New Perspective Fund is 1.58 times less risky than Artisan Global. It trades about 0.07 of its potential returns per unit of risk. Artisan Global Opportunities is currently generating about -0.01 per unit of risk. If you would invest  5,768  in New Perspective Fund on September 13, 2024 and sell it today you would earn a total of  508.00  from holding New Perspective Fund or generate 8.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.32%
Values	Daily Returns

New Perspective Fund  vs.  Artisan Global Opportunities

New Perspective

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in New Perspective Fund are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, New Perspective is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Artisan Global Oppor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Artisan Global Opportunities has generated negative risk-adjusted returns adding no value to fund investors. 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 New Perspective and Artisan Global

The main advantage of trading using opposite New Perspective and Artisan Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Perspective 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 New Perspective Fund and Artisan Global Opportunities 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.