Correlation Between Artisan Thematic and Principal Lifetime

Can any of the company-specific risk be diversified away by investing in both Artisan Thematic and Principal Lifetime 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 Principal Lifetime 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 Principal Lifetime 2050, you can compare the effects of market volatilities on Artisan Thematic and Principal Lifetime 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 Principal Lifetime. Check out your portfolio center. Please also check ongoing floating volatility patterns of Artisan Thematic and Principal Lifetime.

Diversification Opportunities for Artisan Thematic and Principal Lifetime

0.88

Correlation Coefficient

Artisan Thematic  Principal Lifetime

Very poor diversification

The 3 months correlation between Artisan and Principal is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Artisan Thematic Fund and Principal Lifetime 2050 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Principal Lifetime 2050 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 Principal Lifetime. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Principal Lifetime 2050 has no effect on the direction of Artisan Thematic i.e., Artisan Thematic and Principal Lifetime go up and down completely randomly.

Pair Corralation between Artisan Thematic and Principal Lifetime

Assuming the 90 days horizon Artisan Thematic Fund is expected to under-perform the Principal Lifetime. In addition to that, Artisan Thematic is 1.66 times more volatile than Principal Lifetime 2050. It trades about -0.02 of its total potential returns per unit of risk. Principal Lifetime 2050 is currently generating about -0.02 per unit of volatility. If you would invest  1,622  in Principal Lifetime 2050 on December 30, 2024 and sell it today you would lose (17.00) from holding Principal Lifetime 2050 or give up 1.05% of portfolio value over 90 days.

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

Artisan Thematic Fund  vs.  Principal Lifetime 2050

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.

Principal Lifetime 2050

Risk-Adjusted Performance

Very Weak

Over the last 90 days Principal Lifetime 2050 has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward-looking indicators, Principal Lifetime 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 Principal Lifetime

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

The idea behind Artisan Thematic Fund and Principal Lifetime 2050 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.