Correlation Between Artisan International and Third Avenue

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

Diversification Opportunities for Artisan International and Third Avenue

0.91

Correlation Coefficient

Artisan International  Third Avenue

Almost no diversification

The 3 months correlation between Artisan and Third is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Artisan International Fund and Third Avenue Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Third Avenue Value 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 Third Avenue. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Third Avenue Value has no effect on the direction of Artisan International i.e., Artisan International and Third Avenue go up and down completely randomly.

Pair Corralation between Artisan International and Third Avenue

Assuming the 90 days horizon Artisan International Fund is expected to generate 0.3 times more return on investment than Third Avenue. However, Artisan International Fund is 3.28 times less risky than Third Avenue. It trades about -0.11 of its potential returns per unit of risk. Third Avenue Value is currently generating about -0.32 per unit of risk. If you would invest  2,766  in Artisan International Fund on October 11, 2024 and sell it today you would lose (34.00) from holding Artisan International Fund or give up 1.23% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	95.24%
Values	Daily Returns

Artisan International Fund  vs.  Third Avenue Value

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.

Third Avenue Value

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Third Avenue Value has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's technical and fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Artisan International and Third Avenue

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

The idea behind Artisan International Fund and Third Avenue 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.