Correlation Between Artisan High and Kentucky Tax

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

By analyzing existing cross correlation between Artisan High Income and Kentucky Tax Free Income, you can compare the effects of market volatilities on Artisan High and Kentucky Tax 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 High with a short position of Kentucky Tax. Check out your portfolio center. Please also check ongoing floating volatility patterns of Artisan High and Kentucky Tax.

Diversification Opportunities for Artisan High and Kentucky Tax

0.69

Correlation Coefficient

Artisan High  Kentucky Tax

Poor diversification

The 3 months correlation between Artisan and Kentucky is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Artisan High Income and Kentucky Tax Free Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kentucky Tax Free and Artisan High 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 High Income are associated (or correlated) with Kentucky Tax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kentucky Tax Free has no effect on the direction of Artisan High i.e., Artisan High and Kentucky Tax go up and down completely randomly.

Pair Corralation between Artisan High and Kentucky Tax

Assuming the 90 days horizon Artisan High Income is expected to generate 0.55 times more return on investment than Kentucky Tax. However, Artisan High Income is 1.83 times less risky than Kentucky Tax. It trades about -0.26 of its potential returns per unit of risk. Kentucky Tax Free Income is currently generating about -0.29 per unit of risk. If you would invest  921.00  in Artisan High Income on October 9, 2024 and sell it today you would lose (7.00) from holding Artisan High Income or give up 0.76% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.0%
Values	Daily Returns

Artisan High Income  vs.  Kentucky Tax Free Income

Artisan High Income

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Artisan High Income are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Artisan High is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Kentucky Tax Free

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kentucky Tax Free Income has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Kentucky Tax 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 High and Kentucky Tax

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

The idea behind Artisan High Income and Kentucky Tax Free Income 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.