Correlation Between Third Avenue and Artisan International

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

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

Diversification Opportunities for Third Avenue and Artisan International

0.91

Correlation Coefficient

Third Avenue  Artisan International

Almost no diversification

The 3 months correlation between Third and Artisan is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Third Avenue Value and Artisan International Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Artisan International and Third Avenue 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 Third Avenue Value are associated (or correlated) with Artisan International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Artisan International has no effect on the direction of Third Avenue i.e., Third Avenue and Artisan International go up and down completely randomly.

Pair Corralation between Third Avenue and Artisan International

Assuming the 90 days horizon Third Avenue Value is expected to under-perform the Artisan International. In addition to that, Third Avenue is 3.28 times more volatile than Artisan International Fund. It trades about -0.32 of its total potential returns per unit of risk. Artisan International Fund is currently generating about -0.11 per unit of volatility. If you would invest  2,766  in Artisan International Fund on October 11, 2024 and sell it today you would lose (34.00) from holding Artisan International Fund or give up 1.23% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	95.24%
Values	Daily Returns

Third Avenue Value  vs.  Artisan International Fund

Third Avenue Value

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Third Avenue Value has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's technical and fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Artisan International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Artisan International Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward 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 Third Avenue and Artisan International

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

The idea behind Third Avenue Value and Artisan International Fund 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.