Correlation Between Artisan Small and Great West

Can any of the company-specific risk be diversified away by investing in both Artisan Small and Great West 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 Great West 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 Great West Lifetime 2050, you can compare the effects of market volatilities on Artisan Small and Great West 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 Great West. Check out your portfolio center. Please also check ongoing floating volatility patterns of Artisan Small and Great West.

Diversification Opportunities for Artisan Small and Great West

0.81

Correlation Coefficient

Artisan Small  Great West

Very poor diversification

The 3 months correlation between Artisan and Great is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Artisan Small Cap and Great West Lifetime 2050 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great West Lifetime 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 Great West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great West Lifetime has no effect on the direction of Artisan Small i.e., Artisan Small and Great West go up and down completely randomly.

Pair Corralation between Artisan Small and Great West

Assuming the 90 days horizon Artisan Small Cap is expected to generate 1.75 times more return on investment than Great West. However, Artisan Small is 1.75 times more volatile than Great West Lifetime 2050. It trades about 0.03 of its potential returns per unit of risk. Great West Lifetime 2050 is currently generating about 0.02 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	98.33%
Values	Daily Returns

Artisan Small Cap  vs.  Great West Lifetime 2050

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.

Great West Lifetime

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Great West Lifetime 2050 are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Great West 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 Small and Great West

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

The idea behind Artisan Small Cap and Great West Lifetime 2050 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.