Correlation Between Ariel Global and Artisan Emerging

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

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

Diversification Opportunities for Ariel Global and Artisan Emerging

0.92

Correlation Coefficient

Ariel Global  Artisan Emerging

Almost no diversification

The 3 months correlation between Ariel and ARTISAN is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Ariel Global Fund and Artisan Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Artisan Emerging Markets and Ariel 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 Ariel Global Fund are associated (or correlated) with Artisan Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Artisan Emerging Markets has no effect on the direction of Ariel Global i.e., Ariel Global and Artisan Emerging go up and down completely randomly.

Pair Corralation between Ariel Global and Artisan Emerging

Assuming the 90 days horizon Ariel Global is expected to generate 1.03 times less return on investment than Artisan Emerging. But when comparing it to its historical volatility, Ariel Global Fund is 1.27 times less risky than Artisan Emerging. It trades about 0.14 of its potential returns per unit of risk. Artisan Emerging Markets is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  1,708  in Artisan Emerging Markets on December 29, 2024 and sell it today you would earn a total of  119.00  from holding Artisan Emerging Markets or generate 6.97% return on investment over 90 days.

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

Ariel Global Fund  vs.  Artisan Emerging Markets

Ariel Global

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ariel Global Fund are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Ariel Global may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Artisan Emerging Markets

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Artisan Emerging Markets are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Artisan Emerging may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Ariel Global and Artisan Emerging

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

The idea behind Ariel Global Fund and Artisan Emerging Markets 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.