Correlation Between Artisan Thematic and Prudential Health

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

Diversification Opportunities for Artisan Thematic and Prudential Health

0.83

Correlation Coefficient

Artisan Thematic  Prudential Health

Very poor diversification

The 3 months correlation between Artisan and Prudential is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Artisan Thematic Fund and Prudential Health Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Health 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 Prudential Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Health has no effect on the direction of Artisan Thematic i.e., Artisan Thematic and Prudential Health go up and down completely randomly.

Pair Corralation between Artisan Thematic and Prudential Health

Assuming the 90 days horizon Artisan Thematic Fund is expected to under-perform the Prudential Health. In addition to that, Artisan Thematic is 1.3 times more volatile than Prudential Health Sciences. It trades about -0.02 of its total potential returns per unit of risk. Prudential Health Sciences is currently generating about -0.02 per unit of volatility. If you would invest  3,396  in Prudential Health Sciences on December 31, 2024 and sell it today you would lose (54.00) from holding Prudential Health Sciences or give up 1.59% 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.  Prudential Health Sciences

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.

Prudential Health

Risk-Adjusted Performance

Very Weak

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

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

The idea behind Artisan Thematic Fund and Prudential Health Sciences 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.