Correlation Between Longleaf Partners and Artisan International

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

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

Diversification Opportunities for Longleaf Partners and Artisan International

-0.63

Correlation Coefficient

Longleaf Partners  Artisan International

Excellent diversification

The 3 months correlation between Longleaf and Artisan is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Longleaf Partners Fund and Artisan International Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Artisan International and Longleaf Partners 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 Longleaf Partners 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 Longleaf Partners i.e., Longleaf Partners and Artisan International go up and down completely randomly.

Pair Corralation between Longleaf Partners and Artisan International

Assuming the 90 days horizon Longleaf Partners Fund is expected to under-perform the Artisan International. But the mutual fund apears to be less risky and, when comparing its historical volatility, Longleaf Partners Fund is 1.15 times less risky than Artisan International. The mutual fund trades about -0.06 of its potential returns per unit of risk. The Artisan International Fund is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  2,701  in Artisan International Fund on December 21, 2024 and sell it today you would earn a total of  355.00  from holding Artisan International Fund or generate 13.14% return on investment over 90 days.

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

Longleaf Partners Fund  vs.  Artisan International Fund

Longleaf Partners

Risk-Adjusted Performance

Very Weak

Over the last 90 days Longleaf Partners Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Longleaf Partners is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Artisan International

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Artisan International Fund are ranked lower than 19 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Artisan International showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Longleaf Partners and Artisan International

The main advantage of trading using opposite Longleaf Partners and Artisan International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Longleaf Partners 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 Longleaf Partners Fund and Artisan International Fund 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.