Correlation Between Virtus Real and Artisan Thematic

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

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

Diversification Opportunities for Virtus Real and Artisan Thematic

0.72

Correlation Coefficient

Virtus Real  Artisan Thematic

Poor diversification

The 3 months correlation between Virtus and Artisan is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Virtus Real Estate and Artisan Thematic Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Artisan Thematic and Virtus Real 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 Virtus Real Estate are associated (or correlated) with Artisan Thematic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Artisan Thematic has no effect on the direction of Virtus Real i.e., Virtus Real and Artisan Thematic go up and down completely randomly.

Pair Corralation between Virtus Real and Artisan Thematic

Assuming the 90 days horizon Virtus Real Estate is expected to under-perform the Artisan Thematic. But the mutual fund apears to be less risky and, when comparing its historical volatility, Virtus Real Estate is 1.39 times less risky than Artisan Thematic. The mutual fund trades about -0.13 of its potential returns per unit of risk. The Artisan Thematic Fund is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  2,523  in Artisan Thematic Fund on November 29, 2024 and sell it today you would lose (270.00) from holding Artisan Thematic Fund or give up 10.7% of portfolio value over 90 days.

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

Virtus Real Estate  vs.  Artisan Thematic Fund

Virtus Real Estate

Risk-Adjusted Performance

Very Weak

Over the last 90 days Virtus Real Estate has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Artisan Thematic

Risk-Adjusted Performance

Very Weak

Over the last 90 days Artisan Thematic Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic 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 Virtus Real and Artisan Thematic

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

The idea behind Virtus Real Estate and Artisan Thematic 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.