Correlation Between Artisan Partners and Western Acquisition

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

Diversification Opportunities for Artisan Partners and Western Acquisition

0.09

Correlation Coefficient

Artisan Partners  Western Acquisition

Significant diversification

The 3 months correlation between Artisan and Western is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Artisan Partners Asset and Western Acquisition Ventures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Acquisition 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 Western Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Acquisition has no effect on the direction of Artisan Partners i.e., Artisan Partners and Western Acquisition go up and down completely randomly.

Pair Corralation between Artisan Partners and Western Acquisition

Given the investment horizon of 90 days Artisan Partners is expected to generate 2.0 times less return on investment than Western Acquisition. In addition to that, Artisan Partners is 1.01 times more volatile than Western Acquisition Ventures. It trades about 0.03 of its total potential returns per unit of risk. Western Acquisition Ventures is currently generating about 0.05 per unit of volatility. If you would invest  1,043  in Western Acquisition Ventures on September 19, 2024 and sell it today you would earn a total of  56.00  from holding Western Acquisition Ventures or generate 5.37% return on investment over 90 days.

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

Artisan Partners Asset  vs.  Western Acquisition Ventures

Artisan Partners Asset

Risk-Adjusted Performance

2 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Artisan Partners Asset are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Artisan Partners is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Western Acquisition

Risk-Adjusted Performance

4 of 100

Insignificant

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

Pair Trading with Artisan Partners and Western Acquisition

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

The idea behind Artisan Partners Asset and Western Acquisition Ventures 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.

Check out your portfolio center.

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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.