Correlation Between Transamerica Large and Artisan Global

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

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

Diversification Opportunities for Transamerica Large and Artisan Global

0.74

Correlation Coefficient

Transamerica Large  Artisan Global

Poor diversification

The 3 months correlation between Transamerica and Artisan is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Transamerica Large Core and Artisan Global Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Artisan Global Oppor and Transamerica Large 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 Large Core are associated (or correlated) with Artisan Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Artisan Global Oppor has no effect on the direction of Transamerica Large i.e., Transamerica Large and Artisan Global go up and down completely randomly.

Pair Corralation between Transamerica Large and Artisan Global

Assuming the 90 days horizon Transamerica Large Core is expected to under-perform the Artisan Global. In addition to that, Transamerica Large is 4.56 times more volatile than Artisan Global Opportunities. It trades about -0.25 of its total potential returns per unit of risk. Artisan Global Opportunities is currently generating about -0.13 per unit of volatility. If you would invest  3,292  in Artisan Global Opportunities on October 11, 2024 and sell it today you would lose (79.00) from holding Artisan Global Opportunities or give up 2.4% of portfolio value over 90 days.

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

Transamerica Large Core  vs.  Artisan Global Opportunities

Transamerica Large Core

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Transamerica Large Core 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 basic 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 Global Oppor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Artisan Global Opportunities 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 Transamerica Large and Artisan Global

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

The idea behind Transamerica Large Core and Artisan Global Opportunities 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.