Correlation Between Total Return and Artisan Mid

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

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

Diversification Opportunities for Total Return and Artisan Mid

-0.65

Correlation Coefficient

Total Return  Artisan Mid

Excellent diversification

The 3 months correlation between Total and Artisan is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Total Return Fund and Artisan Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Artisan Mid Cap and Total Return 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 Total Return Fund are associated (or correlated) with Artisan Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Artisan Mid Cap has no effect on the direction of Total Return i.e., Total Return and Artisan Mid go up and down completely randomly.

Pair Corralation between Total Return and Artisan Mid

Assuming the 90 days horizon Total Return Fund is expected to under-perform the Artisan Mid. But the mutual fund apears to be less risky and, when comparing its historical volatility, Total Return Fund is 3.18 times less risky than Artisan Mid. The mutual fund trades about -0.07 of its potential returns per unit of risk. The Artisan Mid Cap is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  3,498  in Artisan Mid Cap on September 5, 2024 and sell it today you would earn a total of  582.00  from holding Artisan Mid Cap or generate 16.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Total Return Fund  vs.  Artisan Mid Cap

Total Return

Risk-Adjusted Performance

0 of 100

Very Weak

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

Artisan Mid Cap

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Artisan Mid Cap are ranked lower than 20 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak primary indicators, Artisan Mid showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Total Return and Artisan Mid

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

The idea behind Total Return Fund and Artisan Mid 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.