Correlation Between Artisan Emerging and Short-term Fund

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

Diversification Opportunities for Artisan Emerging and Short-term Fund

0.44

Correlation Coefficient

Artisan Emerging  Short-term Fund

Very weak diversification

The 3 months correlation between Artisan and Short-term is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Artisan Emerging Markets and Short Term Fund R in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Short Term Fund 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 Short-term Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Short Term Fund has no effect on the direction of Artisan Emerging i.e., Artisan Emerging and Short-term Fund go up and down completely randomly.

Pair Corralation between Artisan Emerging and Short-term Fund

Assuming the 90 days horizon Artisan Emerging Markets is expected to generate 2.42 times more return on investment than Short-term Fund. However, Artisan Emerging is 2.42 times more volatile than Short Term Fund R. It trades about 0.21 of its potential returns per unit of risk. Short Term Fund R is currently generating about 0.2 per unit of risk. If you would invest  1,006  in Artisan Emerging Markets on December 29, 2024 and sell it today you would earn a total of  27.00  from holding Artisan Emerging Markets or generate 2.68% return on investment over 90 days.

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

Artisan Emerging Markets  vs.  Short Term Fund R

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.

Short Term Fund

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Short Term Fund R are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Short-term Fund 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 Short-term Fund

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

The idea behind Artisan Emerging Markets and Short Term Fund R 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.