Correlation Between Artisan Thematic and Redwood Systematic

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

Diversification Opportunities for Artisan Thematic and Redwood Systematic

0.9

Correlation Coefficient

Artisan Thematic  Redwood Systematic

Almost no diversification

The 3 months correlation between Artisan and Redwood is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Artisan Thematic Fund and Redwood Systematic Macro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Redwood Systematic Macro 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 Redwood Systematic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Redwood Systematic Macro has no effect on the direction of Artisan Thematic i.e., Artisan Thematic and Redwood Systematic go up and down completely randomly.

Pair Corralation between Artisan Thematic and Redwood Systematic

Assuming the 90 days horizon Artisan Thematic Fund is expected to generate 1.32 times more return on investment than Redwood Systematic. However, Artisan Thematic is 1.32 times more volatile than Redwood Systematic Macro. It trades about 0.17 of its potential returns per unit of risk. Redwood Systematic Macro is currently generating about 0.15 per unit of risk. If you would invest  2,282  in Artisan Thematic Fund on September 12, 2024 and sell it today you would earn a total of  235.00  from holding Artisan Thematic Fund or generate 10.3% return on investment over 90 days.

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

Artisan Thematic Fund  vs.  Redwood Systematic Macro

Artisan Thematic

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Artisan Thematic Fund are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Artisan Thematic may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Redwood Systematic Macro

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Redwood Systematic Macro are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Redwood Systematic may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Artisan Thematic and Redwood Systematic

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

The idea behind Artisan Thematic Fund and Redwood Systematic Macro 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.