Correlation Between Artisan Emerging and American Funds

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

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

Diversification Opportunities for Artisan Emerging and American Funds

-0.16

Correlation Coefficient

Artisan Emerging  American Funds

Good diversification

The 3 months correlation between Artisan and American is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Artisan Emerging Markets and American Funds Strategic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds Strategic and Artisan Emerging 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 Emerging Markets are associated (or correlated) with American Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds Strategic has no effect on the direction of Artisan Emerging i.e., Artisan Emerging and American Funds go up and down completely randomly.

Pair Corralation between Artisan Emerging and American Funds

Assuming the 90 days horizon Artisan Emerging Markets is expected to under-perform the American Funds. But the mutual fund apears to be less risky and, when comparing its historical volatility, Artisan Emerging Markets is 1.54 times less risky than American Funds. The mutual fund trades about -0.26 of its potential returns per unit of risk. The American Funds Strategic is currently generating about -0.14 of returns per unit of risk over similar time horizon. If you would invest  909.00  in American Funds Strategic on September 22, 2024 and sell it today you would lose (13.00) from holding American Funds Strategic or give up 1.43% of portfolio value over 90 days.

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

Artisan Emerging Markets  vs.  American Funds Strategic

Artisan Emerging Markets

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Artisan Emerging Markets has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Artisan Emerging is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

American Funds Strategic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days American Funds Strategic has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, American Funds is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Artisan Emerging and American Funds

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

The idea behind Artisan Emerging Markets and American Funds Strategic 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.