Correlation Between Artisan Thematic and Arrow Managed

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

By analyzing existing cross correlation between Artisan Thematic Fund and Arrow Managed Futures, you can compare the effects of market volatilities on Artisan Thematic and Arrow Managed 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 Thematic with a short position of Arrow Managed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Artisan Thematic and Arrow Managed.

Diversification Opportunities for Artisan Thematic and Arrow Managed

0.76

Correlation Coefficient

Artisan Thematic  Arrow Managed

Poor diversification

The 3 months correlation between Artisan and Arrow is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Artisan Thematic Fund and Arrow Managed Futures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arrow Managed Futures and Artisan Thematic 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 Thematic Fund are associated (or correlated) with Arrow Managed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arrow Managed Futures has no effect on the direction of Artisan Thematic i.e., Artisan Thematic and Arrow Managed go up and down completely randomly.

Pair Corralation between Artisan Thematic and Arrow Managed

Assuming the 90 days horizon Artisan Thematic Fund is expected to generate 0.89 times more return on investment than Arrow Managed. However, Artisan Thematic Fund is 1.13 times less risky than Arrow Managed. It trades about -0.03 of its potential returns per unit of risk. Arrow Managed Futures is currently generating about -0.04 per unit of risk. If you would invest  2,237  in Artisan Thematic Fund on December 26, 2024 and sell it today you would lose (64.00) from holding Artisan Thematic Fund or give up 2.86% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

Artisan Thematic Fund  vs.  Arrow Managed Futures

Artisan Thematic

Risk-Adjusted Performance

Very Weak

Over the last 90 days Artisan Thematic Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Artisan Thematic is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Arrow Managed Futures

Risk-Adjusted Performance

Very Weak

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

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

The idea behind Artisan Thematic Fund and Arrow Managed Futures 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.