Correlation Between Artisan International and Longleaf Partners

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

Diversification Opportunities for Artisan International and Longleaf Partners

0.8

Correlation Coefficient

Artisan International  Longleaf Partners

Very poor diversification

The 3 months correlation between Artisan and Longleaf is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Artisan International Fund and Longleaf Partners Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Longleaf Partners 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 Longleaf Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Longleaf Partners has no effect on the direction of Artisan International i.e., Artisan International and Longleaf Partners go up and down completely randomly.

Pair Corralation between Artisan International and Longleaf Partners

Assuming the 90 days horizon Artisan International is expected to generate 2.27 times less return on investment than Longleaf Partners. But when comparing it to its historical volatility, Artisan International Fund is 1.09 times less risky than Longleaf Partners. It trades about 0.02 of its potential returns per unit of risk. Longleaf Partners Fund is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  2,017  in Longleaf Partners Fund on October 11, 2024 and sell it today you would earn a total of  381.00  from holding Longleaf Partners Fund or generate 18.89% return on investment over 90 days.

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

Artisan International Fund  vs.  Longleaf Partners Fund

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 latest weak performance, the Fund's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Longleaf Partners

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Longleaf Partners Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Longleaf Partners 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 International and Longleaf Partners

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

The idea behind Artisan International Fund and Longleaf Partners Fund 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.