Correlation Between Artisan Emerging and Pace International

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

Diversification Opportunities for Artisan Emerging and Pace International

0.75

Correlation Coefficient

Artisan Emerging  Pace International

Poor diversification

The 3 months correlation between Artisan and Pace is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Artisan Emerging Markets and Pace International Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pace International 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 Pace International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pace International has no effect on the direction of Artisan Emerging i.e., Artisan Emerging and Pace International go up and down completely randomly.

Pair Corralation between Artisan Emerging and Pace International

Assuming the 90 days horizon Artisan Emerging is expected to generate 1.89 times less return on investment than Pace International. But when comparing it to its historical volatility, Artisan Emerging Markets is 4.58 times less risky than Pace International. It trades about 0.21 of its potential returns per unit of risk. Pace International Emerging is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,300  in Pace International Emerging on December 29, 2024 and sell it today you would earn a total of  63.00  from holding Pace International Emerging or generate 4.85% return on investment over 90 days.

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

Artisan Emerging Markets  vs.  Pace International Emerging

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 16 (%) 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.

Pace International

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pace International Emerging are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong primary indicators, Pace International 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 Pace International

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

The idea behind Artisan Emerging Markets and Pace International Emerging 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.