Correlation Between Cref Inflation-linked and Artisan Developing

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

By analyzing existing cross correlation between Cref Inflation Linked Bond and Artisan Developing World, you can compare the effects of market volatilities on Cref Inflation-linked and Artisan Developing 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 Cref Inflation-linked with a short position of Artisan Developing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cref Inflation-linked and Artisan Developing.

Diversification Opportunities for Cref Inflation-linked and Artisan Developing

-0.46

Correlation Coefficient

Cref Inflation-linked  Artisan Developing

Very good diversification

The 3 months correlation between Cref and Artisan is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Cref Inflation Linked Bond and Artisan Developing World in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Artisan Developing World and Cref Inflation-linked 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 Cref Inflation Linked Bond are associated (or correlated) with Artisan Developing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Artisan Developing World has no effect on the direction of Cref Inflation-linked i.e., Cref Inflation-linked and Artisan Developing go up and down completely randomly.

Pair Corralation between Cref Inflation-linked and Artisan Developing

Assuming the 90 days trading horizon Cref Inflation Linked Bond is expected to under-perform the Artisan Developing. But the fund apears to be less risky and, when comparing its historical volatility, Cref Inflation Linked Bond is 4.8 times less risky than Artisan Developing. The fund trades about -0.01 of its potential returns per unit of risk. The Artisan Developing World is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  1,949  in Artisan Developing World on September 7, 2024 and sell it today you would earn a total of  330.00  from holding Artisan Developing World or generate 16.93% return on investment over 90 days.

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

Cref Inflation Linked Bond  vs.  Artisan Developing World

Cref Inflation Linked

Risk-Adjusted Performance

0 of 100

Very Weak

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

Artisan Developing World

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Artisan Developing World are ranked lower than 21 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Artisan Developing showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cref Inflation-linked and Artisan Developing

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

The idea behind Cref Inflation Linked Bond and Artisan Developing World 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.