Correlation Between Small Midcap and Artisan Small

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

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

Diversification Opportunities for Small Midcap and Artisan Small

0.9

Correlation Coefficient

Small Midcap  Artisan Small

Almost no diversification

The 3 months correlation between Small and Artisan is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Small Midcap Dividend Income and Artisan Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Artisan Small Cap and Small Midcap 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 Midcap Dividend Income are associated (or correlated) with Artisan Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Artisan Small Cap has no effect on the direction of Small Midcap i.e., Small Midcap and Artisan Small go up and down completely randomly.

Pair Corralation between Small Midcap and Artisan Small

Assuming the 90 days horizon Small Midcap Dividend Income is expected to generate 0.67 times more return on investment than Artisan Small. However, Small Midcap Dividend Income is 1.49 times less risky than Artisan Small. It trades about 0.12 of its potential returns per unit of risk. Artisan Small Cap is currently generating about 0.08 per unit of risk. If you would invest  1,866  in Small Midcap Dividend Income on September 13, 2024 and sell it today you would earn a total of  129.00  from holding Small Midcap Dividend Income or generate 6.91% return on investment over 90 days.

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

Small Midcap Dividend Income  vs.  Artisan Small Cap

Small Midcap Dividend

Risk-Adjusted Performance

9 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Small Midcap Dividend Income are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Small Midcap may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Artisan Small Cap

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Artisan Small Cap are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Artisan Small may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Small Midcap and Artisan Small

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

The idea behind Small Midcap Dividend Income and Artisan Small Cap 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.