Correlation Between Artisan International and Emerging Markets

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

Diversification Opportunities for Artisan International and Emerging Markets

0.25

Correlation Coefficient

Artisan International  Emerging Markets

Modest diversification

The 3 months correlation between Artisan and Emerging is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Artisan International Fund and Emerging Markets Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerging Markets Por 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 Emerging Markets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerging Markets Por has no effect on the direction of Artisan International i.e., Artisan International and Emerging Markets go up and down completely randomly.

Pair Corralation between Artisan International and Emerging Markets

Assuming the 90 days horizon Artisan International Fund is expected to under-perform the Emerging Markets. In addition to that, Artisan International is 1.53 times more volatile than Emerging Markets Portfolio. It trades about -0.12 of its total potential returns per unit of risk. Emerging Markets Portfolio is currently generating about 0.03 per unit of volatility. If you would invest  2,134  in Emerging Markets Portfolio on September 16, 2024 and sell it today you would earn a total of  29.00  from holding Emerging Markets Portfolio or generate 1.36% return on investment over 90 days.

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

Artisan International Fund  vs.  Emerging Markets Portfolio

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.

Emerging Markets Por

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Emerging Markets Portfolio are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental drivers, Emerging Markets 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 Emerging Markets

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

The idea behind Artisan International Fund and Emerging Markets Portfolio 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.