Correlation Between Small-company Stock and Artisan International

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

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

Diversification Opportunities for Small-company Stock and Artisan International

0.54

Correlation Coefficient

Small-company Stock  Artisan International

Very weak diversification

The 3 months correlation between Small-company and Artisan is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Small Company Stock Fund and Artisan International Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Artisan International and Small-company Stock 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 Small Company Stock Fund are associated (or correlated) with Artisan International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Artisan International has no effect on the direction of Small-company Stock i.e., Small-company Stock and Artisan International go up and down completely randomly.

Pair Corralation between Small-company Stock and Artisan International

Assuming the 90 days horizon Small Company Stock Fund is expected to under-perform the Artisan International. In addition to that, Small-company Stock is 1.32 times more volatile than Artisan International Small. It trades about -0.25 of its total potential returns per unit of risk. Artisan International Small is currently generating about -0.08 per unit of volatility. If you would invest  1,809  in Artisan International Small on December 1, 2024 and sell it today you would lose (75.00) from holding Artisan International Small or give up 4.15% of portfolio value over 90 days.

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

Small Company Stock Fund  vs.  Artisan International Small

Small-company Stock

Risk-Adjusted Performance

Very Weak

Over the last 90 days Small Company Stock Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Artisan International

Risk-Adjusted Performance

Very Weak

Over the last 90 days Artisan International Small has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward-looking indicators, Artisan International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Small-company Stock and Artisan International

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

The idea behind Small Company Stock Fund and Artisan International Small 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.

Check out your portfolio center.

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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.