Correlation Between XIAO I and Artisan Partners

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

By analyzing existing cross correlation between XIAO I American and Artisan Partners Asset, you can compare the effects of market volatilities on XIAO I and Artisan Partners 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 XIAO I with a short position of Artisan Partners. Check out your portfolio center. Please also check ongoing floating volatility patterns of XIAO I and Artisan Partners.

Diversification Opportunities for XIAO I and Artisan Partners

0.21

Correlation Coefficient

XIAO I  Artisan Partners

Modest diversification

The 3 months correlation between XIAO and Artisan is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding XIAO I American and Artisan Partners Asset in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Artisan Partners Asset and XIAO I 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 XIAO I American are associated (or correlated) with Artisan Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Artisan Partners Asset has no effect on the direction of XIAO I i.e., XIAO I and Artisan Partners go up and down completely randomly.

Pair Corralation between XIAO I and Artisan Partners

Given the investment horizon of 90 days XIAO I American is expected to generate 3.64 times more return on investment than Artisan Partners. However, XIAO I is 3.64 times more volatile than Artisan Partners Asset. It trades about -0.02 of its potential returns per unit of risk. Artisan Partners Asset is currently generating about -0.22 per unit of risk. If you would invest  592.00  in XIAO I American on October 11, 2024 and sell it today you would lose (65.00) from holding XIAO I American or give up 10.98% of portfolio value over 90 days.

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

XIAO I American  vs.  Artisan Partners Asset

XIAO I American

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in XIAO I American are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, XIAO I may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Artisan Partners Asset

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Artisan Partners Asset has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Artisan Partners is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with XIAO I and Artisan Partners

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

The idea behind XIAO I American and Artisan Partners Asset 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.