Correlation Between Artisan Global and Kinetics Small

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

By analyzing existing cross correlation between Artisan Global Unconstrained and Kinetics Small Cap, you can compare the effects of market volatilities on Artisan Global and Kinetics Small 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 Global with a short position of Kinetics Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Artisan Global and Kinetics Small.

Diversification Opportunities for Artisan Global and Kinetics Small

0.87

Correlation Coefficient

Artisan Global  Kinetics Small

Very poor diversification

The 3 months correlation between Artisan and Kinetics is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Artisan Global Unconstrained and Kinetics Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinetics Small Cap and Artisan Global 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 Global Unconstrained are associated (or correlated) with Kinetics Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinetics Small Cap has no effect on the direction of Artisan Global i.e., Artisan Global and Kinetics Small go up and down completely randomly.

Pair Corralation between Artisan Global and Kinetics Small

Assuming the 90 days horizon Artisan Global is expected to generate 11.44 times less return on investment than Kinetics Small. But when comparing it to its historical volatility, Artisan Global Unconstrained is 17.71 times less risky than Kinetics Small. It trades about 0.25 of its potential returns per unit of risk. Kinetics Small Cap is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  15,354  in Kinetics Small Cap on September 18, 2024 and sell it today you would earn a total of  3,809  from holding Kinetics Small Cap or generate 24.81% return on investment over 90 days.

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

Artisan Global Unconstrained  vs.  Kinetics Small Cap

Artisan Global Uncon

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Artisan Global Unconstrained 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 Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Kinetics Small Cap

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kinetics Small Cap are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Kinetics Small showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Artisan Global and Kinetics Small

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

The idea behind Artisan Global Unconstrained and Kinetics Small Cap 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.