Correlation Between Growth Opportunities and Artisan Thematic

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

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

Diversification Opportunities for Growth Opportunities and Artisan Thematic

0.96

Correlation Coefficient

Growth Opportunities  Artisan Thematic

Almost no diversification

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

Pair Corralation between Growth Opportunities and Artisan Thematic

Assuming the 90 days horizon Growth Opportunities is expected to generate 1.07 times less return on investment than Artisan Thematic. In addition to that, Growth Opportunities is 1.01 times more volatile than Artisan Thematic Fund. It trades about 0.2 of its total potential returns per unit of risk. Artisan Thematic Fund is currently generating about 0.22 per unit of volatility. If you would invest  2,215  in Artisan Thematic Fund on September 2, 2024 and sell it today you would earn a total of  308.00  from holding Artisan Thematic Fund or generate 13.91% return on investment over 90 days.

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

Growth Opportunities Fund  vs.  Artisan Thematic Fund

Growth Opportunities

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Growth Opportunities Fund are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Growth Opportunities may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Artisan Thematic

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Artisan Thematic Fund are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Artisan Thematic showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Growth Opportunities and Artisan Thematic

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

The idea behind Growth Opportunities Fund and Artisan Thematic Fund 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.