Correlation Between Artisan Small and Transamerica Capital

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

Diversification Opportunities for Artisan Small and Transamerica Capital

0.86

Correlation Coefficient

Artisan Small  Transamerica Capital

Very poor diversification

The 3 months correlation between Artisan and Transamerica is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Artisan Small Cap and Transamerica Capital Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transamerica Capital 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 Transamerica Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transamerica Capital has no effect on the direction of Artisan Small i.e., Artisan Small and Transamerica Capital go up and down completely randomly.

Pair Corralation between Artisan Small and Transamerica Capital

Assuming the 90 days horizon Artisan Small Cap is expected to generate 0.69 times more return on investment than Transamerica Capital. However, Artisan Small Cap is 1.45 times less risky than Transamerica Capital. It trades about -0.09 of its potential returns per unit of risk. Transamerica Capital Growth is currently generating about -0.07 per unit of risk. If you would invest  3,610  in Artisan Small Cap on December 24, 2024 and sell it today you would lose (293.00) from holding Artisan Small Cap or give up 8.12% of portfolio value over 90 days.

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

Artisan Small Cap  vs.  Transamerica Capital Growth

Artisan Small Cap

Risk-Adjusted Performance

Very Weak

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

Transamerica Capital

Risk-Adjusted Performance

Very Weak

Over the last 90 days Transamerica Capital Growth 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 Transamerica Capital

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

The idea behind Artisan Small Cap and Transamerica Capital Growth 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.