Correlation Between Artisan Partners and PVH Corp

Can any of the company-specific risk be diversified away by investing in both Artisan Partners and PVH Corp 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 PVH Corp 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 PVH Corp, you can compare the effects of market volatilities on Artisan Partners and PVH Corp 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 PVH Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Artisan Partners and PVH Corp.

Diversification Opportunities for Artisan Partners and PVH Corp

0.73

Correlation Coefficient

Artisan Partners  PVH Corp

Poor diversification

The 3 months correlation between Artisan and PVH is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Artisan Partners Asset and PVH Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PVH Corp 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 PVH Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PVH Corp has no effect on the direction of Artisan Partners i.e., Artisan Partners and PVH Corp go up and down completely randomly.

Pair Corralation between Artisan Partners and PVH Corp

Given the investment horizon of 90 days Artisan Partners Asset is expected to under-perform the PVH Corp. But the stock apears to be less risky and, when comparing its historical volatility, Artisan Partners Asset is 1.07 times less risky than PVH Corp. The stock trades about -0.33 of its potential returns per unit of risk. The PVH Corp is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  11,117  in PVH Corp on October 1, 2024 and sell it today you would lose (371.00) from holding PVH Corp or give up 3.34% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

Artisan Partners Asset  vs.  PVH Corp

Artisan Partners Asset

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Artisan Partners Asset are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Artisan Partners may actually be approaching a critical reversion point that can send shares even higher in January 2025.

PVH Corp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PVH Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, PVH Corp may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Artisan Partners and PVH Corp

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

The idea behind Artisan Partners Asset and PVH Corp 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.