Correlation Between Aqr Global and Artisan Small

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

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

Diversification Opportunities for Aqr Global and Artisan Small

-0.75

Correlation Coefficient

Aqr Global  Artisan Small

Pay attention - limited upside

The 3 months correlation between Aqr and Artisan is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Aqr Global Macro 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 Aqr Global 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 Aqr Global Macro 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 Aqr Global i.e., Aqr Global and Artisan Small go up and down completely randomly.

Pair Corralation between Aqr Global and Artisan Small

Assuming the 90 days horizon Aqr Global Macro is expected to generate 0.32 times more return on investment than Artisan Small. However, Aqr Global Macro is 3.08 times less risky than Artisan Small. It trades about 0.31 of its potential returns per unit of risk. Artisan Small Cap is currently generating about -0.07 per unit of risk. If you would invest  933.00  in Aqr Global Macro on December 20, 2024 and sell it today you would earn a total of  85.00  from holding Aqr Global Macro or generate 9.11% return on investment over 90 days.

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

Aqr Global Macro  vs.  Artisan Small Cap

Aqr Global Macro

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Aqr Global Macro are ranked lower than 24 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Aqr Global may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Artisan Small Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Artisan Small Cap 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 Aqr Global and Artisan Small

The main advantage of trading using opposite Aqr Global and Artisan Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aqr Global 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 Aqr Global Macro 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.