Correlation Between Baron Small and Artisan Mid

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

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

Diversification Opportunities for Baron Small and Artisan Mid

0.97

Correlation Coefficient

Baron Small  Artisan Mid

Almost no diversification

The 3 months correlation between Baron and Artisan is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Baron Small Cap and Artisan Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Artisan Mid Cap and Baron 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 Baron Small Cap are associated (or correlated) with Artisan Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Artisan Mid Cap has no effect on the direction of Baron Small i.e., Baron Small and Artisan Mid go up and down completely randomly.

Pair Corralation between Baron Small and Artisan Mid

Assuming the 90 days horizon Baron Small Cap is expected to under-perform the Artisan Mid. But the mutual fund apears to be less risky and, when comparing its historical volatility, Baron Small Cap is 1.17 times less risky than Artisan Mid. The mutual fund trades about -0.11 of its potential returns per unit of risk. The Artisan Mid Cap is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  3,409  in Artisan Mid Cap on December 29, 2024 and sell it today you would lose (259.00) from holding Artisan Mid Cap or give up 7.6% of portfolio value over 90 days.

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

Baron Small Cap  vs.  Artisan Mid Cap

Baron Small Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Baron Small 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.

Artisan Mid Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Artisan Mid Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's primary 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 Baron Small and Artisan Mid

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

The idea behind Baron Small Cap and Artisan Mid 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.