Correlation Between Conestoga Small and Artisan Developing

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

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

Diversification Opportunities for Conestoga Small and Artisan Developing

0.75

Correlation Coefficient

Conestoga Small  Artisan Developing

Poor diversification

The 3 months correlation between Conestoga and Artisan is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Conestoga Small Cap and Artisan Developing World in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Artisan Developing World and Conestoga 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 Conestoga Small Cap are associated (or correlated) with Artisan Developing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Artisan Developing World has no effect on the direction of Conestoga Small i.e., Conestoga Small and Artisan Developing go up and down completely randomly.

Pair Corralation between Conestoga Small and Artisan Developing

Assuming the 90 days horizon Conestoga Small Cap is expected to generate 1.27 times more return on investment than Artisan Developing. However, Conestoga Small is 1.27 times more volatile than Artisan Developing World. It trades about 0.18 of its potential returns per unit of risk. Artisan Developing World is currently generating about 0.23 per unit of risk. If you would invest  7,311  in Conestoga Small Cap on September 2, 2024 and sell it today you would earn a total of  1,052  from holding Conestoga Small Cap or generate 14.39% return on investment over 90 days.

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

Conestoga Small Cap  vs.  Artisan Developing World

Conestoga Small Cap

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Conestoga Small Cap are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Conestoga Small showed solid returns over the last few months and may actually be approaching a breakup point.

Artisan Developing World

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Artisan Developing World are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Artisan Developing showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Conestoga Small and Artisan Developing

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

The idea behind Conestoga Small Cap and Artisan Developing World 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.