Correlation Between Artisan Small and Franklin Missouri

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

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

Diversification Opportunities for Artisan Small and Franklin Missouri

0.52

Correlation Coefficient

Artisan Small  Franklin Missouri

Very weak diversification

The 3 months correlation between Artisan and Franklin is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Artisan Small Cap and Franklin Missouri Tax Free in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Missouri Tax and Artisan Small 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 Small Cap are associated (or correlated) with Franklin Missouri. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Missouri Tax has no effect on the direction of Artisan Small i.e., Artisan Small and Franklin Missouri go up and down completely randomly.

Pair Corralation between Artisan Small and Franklin Missouri

Assuming the 90 days horizon Artisan Small Cap is expected to under-perform the Franklin Missouri. In addition to that, Artisan Small is 5.66 times more volatile than Franklin Missouri Tax Free. It trades about -0.15 of its total potential returns per unit of risk. Franklin Missouri Tax Free is currently generating about -0.03 per unit of volatility. If you would invest  1,055  in Franklin Missouri Tax Free on December 1, 2024 and sell it today you would lose (5.00) from holding Franklin Missouri Tax Free or give up 0.47% of portfolio value over 90 days.

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

Artisan Small Cap  vs.  Franklin Missouri Tax Free

Artisan Small Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Artisan Small Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Franklin Missouri Tax

Risk-Adjusted Performance

Very Weak

Over the last 90 days Franklin Missouri Tax Free has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Franklin Missouri 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 Small and Franklin Missouri

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

The idea behind Artisan Small Cap and Franklin Missouri Tax Free 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.