Correlation Between Health Care and Artisan Select

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

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

Diversification Opportunities for Health Care and Artisan Select

0.58

Correlation Coefficient

Health Care  Artisan Select

Very weak diversification

The 3 months correlation between Health and Artisan is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Health Care Fund and Artisan Select Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Artisan Select Equity and Health Care 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 Health Care Fund are associated (or correlated) with Artisan Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Artisan Select Equity has no effect on the direction of Health Care i.e., Health Care and Artisan Select go up and down completely randomly.

Pair Corralation between Health Care and Artisan Select

Assuming the 90 days horizon Health Care is expected to generate 3.47 times less return on investment than Artisan Select. But when comparing it to its historical volatility, Health Care Fund is 1.09 times less risky than Artisan Select. It trades about 0.04 of its potential returns per unit of risk. Artisan Select Equity is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  1,538  in Artisan Select Equity on December 30, 2024 and sell it today you would earn a total of  111.00  from holding Artisan Select Equity or generate 7.22% return on investment over 90 days.

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

Health Care Fund  vs.  Artisan Select Equity

Health Care Fund

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Health Care Fund are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Health Care is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Artisan Select Equity

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Artisan Select Equity are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Artisan Select may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Health Care and Artisan Select

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

The idea behind Health Care Fund and Artisan Select Equity 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.

Check out your portfolio center.

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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.