Correlation Between Artisan Partners and Bayer AG

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

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

Diversification Opportunities for Artisan Partners and Bayer AG

-0.13

Correlation Coefficient

Artisan Partners  Bayer AG

Good diversification

The 3 months correlation between Artisan and Bayer is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Artisan Partners Asset and Bayer AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bayer AG and Artisan Partners 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 Artisan Partners Asset are associated (or correlated) with Bayer AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bayer AG has no effect on the direction of Artisan Partners i.e., Artisan Partners and Bayer AG go up and down completely randomly.

Pair Corralation between Artisan Partners and Bayer AG

Given the investment horizon of 90 days Artisan Partners Asset is expected to generate 0.82 times more return on investment than Bayer AG. However, Artisan Partners Asset is 1.23 times less risky than Bayer AG. It trades about 0.07 of its potential returns per unit of risk. Bayer AG is currently generating about -0.07 per unit of risk. If you would invest  2,560  in Artisan Partners Asset on December 2, 2024 and sell it today you would earn a total of  1,662  from holding Artisan Partners Asset or generate 64.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.38%
Values	Daily Returns

Artisan Partners Asset  vs.  Bayer AG

Artisan Partners Asset

Risk-Adjusted Performance

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 latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Bayer AG

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bayer AG are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Bayer AG reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Artisan Partners and Bayer AG

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

The idea behind Artisan Partners Asset and Bayer AG 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.