Correlation Between Artisan Small and Strategic Asset

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

Diversification Opportunities for Artisan Small and Strategic Asset

0.89

Correlation Coefficient

Artisan Small  Strategic Asset

Very poor diversification

The 3 months correlation between Artisan and Strategic is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Artisan Small Cap and Strategic Asset Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strategic Asset Mana 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 Strategic Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strategic Asset Mana has no effect on the direction of Artisan Small i.e., Artisan Small and Strategic Asset go up and down completely randomly.

Pair Corralation between Artisan Small and Strategic Asset

Assuming the 90 days horizon Artisan Small Cap is expected to generate 1.88 times more return on investment than Strategic Asset. However, Artisan Small is 1.88 times more volatile than Strategic Asset Management. It trades about 0.22 of its potential returns per unit of risk. Strategic Asset Management is currently generating about 0.19 per unit of risk. If you would invest  3,432  in Artisan Small Cap on September 5, 2024 and sell it today you would earn a total of  588.00  from holding Artisan Small Cap or generate 17.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.44%
Values	Daily Returns

Artisan Small Cap  vs.  Strategic Asset Management

Artisan Small Cap

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Artisan Small Cap are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Artisan Small showed solid returns over the last few months and may actually be approaching a breakup point.

Strategic Asset Mana

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Strategic Asset Management are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Strategic Asset may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Artisan Small and Strategic Asset

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

The idea behind Artisan Small Cap and Strategic Asset Management 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.