Correlation Between Artisan High and Pace Large

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

Diversification Opportunities for Artisan High and Pace Large

0.51

Correlation Coefficient

Artisan High  Pace Large

Very weak diversification

The 3 months correlation between Artisan and Pace is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Artisan High Income and Pace Large Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pace Large Value 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 Pace Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pace Large Value has no effect on the direction of Artisan High i.e., Artisan High and Pace Large go up and down completely randomly.

Pair Corralation between Artisan High and Pace Large

Assuming the 90 days horizon Artisan High is expected to generate 4.07 times less return on investment than Pace Large. But when comparing it to its historical volatility, Artisan High Income is 4.15 times less risky than Pace Large. It trades about 0.14 of its potential returns per unit of risk. Pace Large Value is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  2,010  in Pace Large Value on December 20, 2024 and sell it today you would earn a total of  119.00  from holding Pace Large Value or generate 5.92% return on investment over 90 days.

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

Artisan High Income  vs.  Pace Large Value

Artisan High Income

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Artisan High Income are ranked lower than 10 (%) 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.

Pace Large Value

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pace Large Value are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Pace Large may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Artisan High and Pace Large

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

The idea behind Artisan High Income and Pace Large Value 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.

Check out your portfolio center.

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.