Correlation Between Artisan Small and Live Oak

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

Diversification Opportunities for Artisan Small and Live Oak

0.71

Correlation Coefficient

Artisan Small  Live Oak

Poor diversification

The 3 months correlation between Artisan and Live is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Artisan Small Cap and Live Oak Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Live Oak Health 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 Live Oak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Live Oak Health has no effect on the direction of Artisan Small i.e., Artisan Small and Live Oak go up and down completely randomly.

Pair Corralation between Artisan Small and Live Oak

Assuming the 90 days horizon Artisan Small Cap is expected to generate 1.27 times more return on investment than Live Oak. However, Artisan Small is 1.27 times more volatile than Live Oak Health. It trades about 0.2 of its potential returns per unit of risk. Live Oak Health is currently generating about 0.02 per unit of risk. If you would invest  3,628  in Artisan Small Cap on October 23, 2024 and sell it today you would earn a total of  164.00  from holding Artisan Small Cap or generate 4.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	94.74%
Values	Daily Returns

Artisan Small Cap  vs.  Live Oak Health

Artisan Small Cap

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Artisan Small Cap are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Artisan Small is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Live Oak Health

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Live Oak Health has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Live Oak 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 Live Oak

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

The idea behind Artisan Small Cap and Live Oak Health 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.