Correlation Between Artisan Small and Destinations Large

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

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

Diversification Opportunities for Artisan Small and Destinations Large

0.81

Correlation Coefficient

Artisan Small  Destinations Large

Very poor diversification

The 3 months correlation between Artisan and Destinations is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Artisan Small Cap and Destinations Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Destinations Large Cap and Artisan Small 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 Small Cap are associated (or correlated) with Destinations Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Destinations Large Cap has no effect on the direction of Artisan Small i.e., Artisan Small and Destinations Large go up and down completely randomly.

Pair Corralation between Artisan Small and Destinations Large

Assuming the 90 days horizon Artisan Small Cap is expected to generate 0.71 times more return on investment than Destinations Large. However, Artisan Small Cap is 1.42 times less risky than Destinations Large. It trades about 0.03 of its potential returns per unit of risk. Destinations Large Cap is currently generating about -0.06 per unit of risk. If you would invest  3,698  in Artisan Small Cap on October 26, 2024 and sell it today you would earn a total of  66.00  from holding Artisan Small Cap or generate 1.78% return on investment over 90 days.

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

Artisan Small Cap  vs.  Destinations Large Cap

Artisan Small Cap

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Artisan Small Cap are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Artisan Small is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Destinations Large Cap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Destinations Large Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Artisan Small and Destinations Large

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

The idea behind Artisan Small Cap and Destinations Large 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.