Correlation Between Artisan Emerging and Icon Natural

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

Diversification Opportunities for Artisan Emerging and Icon Natural

0.0

Correlation Coefficient

Artisan Emerging  Icon Natural

Pay attention - limited upside

The 3 months correlation between Artisan and Icon is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Artisan Emerging Markets and Icon Natural Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Icon Natural Resources 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 Icon Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Icon Natural Resources has no effect on the direction of Artisan Emerging i.e., Artisan Emerging and Icon Natural go up and down completely randomly.

Pair Corralation between Artisan Emerging and Icon Natural

Assuming the 90 days horizon Artisan Emerging Markets is expected to generate 0.16 times more return on investment than Icon Natural. However, Artisan Emerging Markets is 6.35 times less risky than Icon Natural. It trades about 0.25 of its potential returns per unit of risk. Icon Natural Resources is currently generating about -0.08 per unit of risk. If you would invest  1,020  in Artisan Emerging Markets on November 20, 2024 and sell it today you would earn a total of  32.00  from holding Artisan Emerging Markets or generate 3.14% return on investment over 90 days.

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

Artisan Emerging Markets  vs.  Icon Natural Resources

Artisan Emerging Markets

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Artisan Emerging Markets are ranked lower than 19 (%) of all funds and portfolios of funds over the last 90 days. 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.

Icon Natural Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days Icon Natural Resources has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's primary indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Artisan Emerging and Icon Natural

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

The idea behind Artisan Emerging Markets and Icon Natural Resources 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.