Correlation Between Artisan Consumer and BAB

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

By analyzing existing cross correlation between Artisan Consumer Goods and BAB Inc, you can compare the effects of market volatilities on Artisan Consumer and BAB 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 Consumer with a short position of BAB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Artisan Consumer and BAB.

Diversification Opportunities for Artisan Consumer and BAB

0.03

Correlation Coefficient

Artisan Consumer  BAB

Significant diversification

The 3 months correlation between Artisan and BAB is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Artisan Consumer Goods and BAB Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BAB Inc and Artisan Consumer 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 Consumer Goods are associated (or correlated) with BAB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BAB Inc has no effect on the direction of Artisan Consumer i.e., Artisan Consumer and BAB go up and down completely randomly.

Pair Corralation between Artisan Consumer and BAB

Given the investment horizon of 90 days Artisan Consumer Goods is expected to under-perform the BAB. In addition to that, Artisan Consumer is 1.68 times more volatile than BAB Inc. It trades about -0.12 of its total potential returns per unit of risk. BAB Inc is currently generating about -0.01 per unit of volatility. If you would invest  85.00  in BAB Inc on December 27, 2024 and sell it today you would lose (6.00) from holding BAB Inc or give up 7.06% of portfolio value over 90 days.

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

Artisan Consumer Goods  vs.  BAB Inc

Artisan Consumer Goods

Risk-Adjusted Performance

Very Weak

Over the last 90 days Artisan Consumer Goods has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

BAB Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days BAB Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, BAB is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Artisan Consumer and BAB

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

The idea behind Artisan Consumer Goods and BAB Inc 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.