Correlation Between Artisan Small and Dimensional Retirement

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

Diversification Opportunities for Artisan Small and Dimensional Retirement

0.66

Correlation Coefficient

Artisan Small  Dimensional Retirement

Poor diversification

The 3 months correlation between Artisan and Dimensional is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Artisan Small Cap and Dimensional Retirement Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dimensional Retirement 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 Dimensional Retirement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dimensional Retirement has no effect on the direction of Artisan Small i.e., Artisan Small and Dimensional Retirement go up and down completely randomly.

Pair Corralation between Artisan Small and Dimensional Retirement

Assuming the 90 days horizon Artisan Small Cap is expected to generate 6.1 times more return on investment than Dimensional Retirement. However, Artisan Small is 6.1 times more volatile than Dimensional Retirement Income. It trades about 0.0 of its potential returns per unit of risk. Dimensional Retirement Income is currently generating about -0.11 per unit of risk. If you would invest  3,657  in Artisan Small Cap on October 11, 2024 and sell it today you would lose (29.00) from holding Artisan Small Cap or give up 0.79% of portfolio value over 90 days.

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

Artisan Small Cap  vs.  Dimensional Retirement Income

Artisan Small Cap

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Artisan Small Cap has generated negative risk-adjusted returns adding no value to fund investors. 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.

Dimensional Retirement

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dimensional Retirement Income has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Dimensional Retirement 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 Dimensional Retirement

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

The idea behind Artisan Small Cap and Dimensional Retirement Income 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.