Correlation Between Artisan Small and Profunds Ultrashort

Can any of the company-specific risk be diversified away by investing in both Artisan Small and Profunds Ultrashort 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 Profunds Ultrashort 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 Profunds Ultrashort Nasdaq 100, you can compare the effects of market volatilities on Artisan Small and Profunds Ultrashort 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 Profunds Ultrashort. Check out your portfolio center. Please also check ongoing floating volatility patterns of Artisan Small and Profunds Ultrashort.

Diversification Opportunities for Artisan Small and Profunds Ultrashort

-0.29

Correlation Coefficient

Artisan Small  Profunds Ultrashort

Very good diversification

The 3 months correlation between Artisan and Profunds is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Artisan Small Cap and Profunds Ultrashort Nasdaq 100 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Profunds Ultrashort 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 Profunds Ultrashort. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Profunds Ultrashort has no effect on the direction of Artisan Small i.e., Artisan Small and Profunds Ultrashort go up and down completely randomly.

Pair Corralation between Artisan Small and Profunds Ultrashort

Assuming the 90 days horizon Artisan Small Cap is expected to under-perform the Profunds Ultrashort. But the mutual fund apears to be less risky and, when comparing its historical volatility, Artisan Small Cap is 1.52 times less risky than Profunds Ultrashort. The mutual fund trades about -0.24 of its potential returns per unit of risk. The Profunds Ultrashort Nasdaq 100 is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  2,265  in Profunds Ultrashort Nasdaq 100 on October 9, 2024 and sell it today you would lose (30.00) from holding Profunds Ultrashort Nasdaq 100 or give up 1.32% of portfolio value over 90 days.

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

Artisan Small Cap  vs.  Profunds Ultrashort Nasdaq 100

Artisan Small Cap

Risk-Adjusted Performance

0 of 100

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 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.

Profunds Ultrashort

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Profunds Ultrashort Nasdaq 100 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.

Pair Trading with Artisan Small and Profunds Ultrashort

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

The idea behind Artisan Small Cap and Profunds Ultrashort Nasdaq 100 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.