Correlation Between Artisan International and Baron Small

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

By analyzing existing cross correlation between Artisan International Fund and Baron Small Cap, you can compare the effects of market volatilities on Artisan International and Baron Small 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 International with a short position of Baron Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Artisan International and Baron Small.

Diversification Opportunities for Artisan International and Baron Small

0.03

Correlation Coefficient

Artisan International  Baron Small

Significant diversification

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

Pair Corralation between Artisan International and Baron Small

Assuming the 90 days horizon Artisan International is expected to generate 23.58 times less return on investment than Baron Small. But when comparing it to its historical volatility, Artisan International Fund is 1.71 times less risky than Baron Small. It trades about 0.01 of its potential returns per unit of risk. Baron Small Cap is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  3,239  in Baron Small Cap on September 11, 2024 and sell it today you would earn a total of  380.00  from holding Baron Small Cap or generate 11.73% return on investment over 90 days.

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

Artisan International Fund  vs.  Baron Small Cap

Artisan International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Artisan International Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Artisan International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Baron Small Cap

Risk-Adjusted Performance

13 of 100

Good

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

Pair Trading with Artisan International and Baron Small

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

The idea behind Artisan International Fund and Baron Small Cap 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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.