Correlation Between Transamerica Capital and Artisan Small

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

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

Diversification Opportunities for Transamerica Capital and Artisan Small

0.12

Correlation Coefficient

Transamerica Capital  Artisan Small

Average diversification

The 3 months correlation between Transamerica and Artisan is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Transamerica Capital Growth 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 Transamerica Capital 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 Transamerica Capital Growth 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 Transamerica Capital i.e., Transamerica Capital and Artisan Small go up and down completely randomly.

Pair Corralation between Transamerica Capital and Artisan Small

Assuming the 90 days horizon Transamerica Capital Growth is expected to generate 1.31 times more return on investment than Artisan Small. However, Transamerica Capital is 1.31 times more volatile than Artisan Small Cap. It trades about 0.09 of its potential returns per unit of risk. Artisan Small Cap is currently generating about 0.02 per unit of risk. If you would invest  1,980  in Transamerica Capital Growth on October 24, 2024 and sell it today you would earn a total of  1,879  from holding Transamerica Capital Growth or generate 94.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	97.57%
Values	Daily Returns

Transamerica Capital Growth  vs.  Artisan Small Cap

Transamerica Capital

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Transamerica Capital Growth are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Transamerica Capital showed solid returns over the last few months and may actually be approaching a breakup point.

Artisan Small Cap

Risk-Adjusted Performance

3 of 100

Insignificant

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

Pair Trading with Transamerica Capital and Artisan Small

The main advantage of trading using opposite Transamerica Capital and Artisan Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transamerica Capital 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 Transamerica Capital Growth 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.