Correlation Between Emerging Markets and Artisan International

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

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

Diversification Opportunities for Emerging Markets and Artisan International

0.58

Correlation Coefficient

Emerging Markets  Artisan International

Very weak diversification

The 3 months correlation between Emerging and Artisan is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Emerging Markets Portfolio and Artisan International Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Artisan International and Emerging Markets 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 Emerging Markets Portfolio 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 Emerging Markets i.e., Emerging Markets and Artisan International go up and down completely randomly.

Pair Corralation between Emerging Markets and Artisan International

Assuming the 90 days horizon Emerging Markets Portfolio is expected to under-perform the Artisan International. But the mutual fund apears to be less risky and, when comparing its historical volatility, Emerging Markets Portfolio is 1.55 times less risky than Artisan International. The mutual fund trades about -0.07 of its potential returns per unit of risk. The Artisan International Fund is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  3,053  in Artisan International Fund on December 4, 2024 and sell it today you would lose (67.00) from holding Artisan International Fund or give up 2.19% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

Emerging Markets Portfolio  vs.  Artisan International Fund

Emerging Markets Por

Risk-Adjusted Performance

Very Weak

Over the last 90 days Emerging Markets Portfolio has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental drivers, Emerging Markets 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

Very Weak

Over the last 90 days Artisan International Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward 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 Emerging Markets and Artisan International

The main advantage of trading using opposite Emerging Markets and Artisan International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emerging Markets 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 Emerging Markets Portfolio 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.

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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.