Correlation Between Artisan Small and Tfa Alphagen

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

Diversification Opportunities for Artisan Small and Tfa Alphagen

0.73

Correlation Coefficient

Artisan Small  Tfa Alphagen

Poor diversification

The 3 months correlation between Artisan and Tfa is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Artisan Small Cap and Tfa Alphagen Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tfa Alphagen Growth 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 Tfa Alphagen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tfa Alphagen Growth has no effect on the direction of Artisan Small i.e., Artisan Small and Tfa Alphagen go up and down completely randomly.

Pair Corralation between Artisan Small and Tfa Alphagen

Assuming the 90 days horizon Artisan Small Cap is expected to under-perform the Tfa Alphagen. In addition to that, Artisan Small is 1.22 times more volatile than Tfa Alphagen Growth. It trades about -0.07 of its total potential returns per unit of risk. Tfa Alphagen Growth is currently generating about -0.05 per unit of volatility. If you would invest  1,106  in Tfa Alphagen Growth on December 29, 2024 and sell it today you would lose (47.00) from holding Tfa Alphagen Growth or give up 4.25% of portfolio value over 90 days.

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

Artisan Small Cap  vs.  Tfa Alphagen Growth

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 latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Tfa Alphagen Growth

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tfa Alphagen Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Tfa Alphagen 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 Tfa Alphagen

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

The idea behind Artisan Small Cap and Tfa Alphagen Growth 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.