Correlation Between Ultralatin America and Artisan Emerging

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

By analyzing existing cross correlation between Ultralatin America Profund and Artisan Emerging Markets, you can compare the effects of market volatilities on Ultralatin America and Artisan Emerging 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 Ultralatin America with a short position of Artisan Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ultralatin America and Artisan Emerging.

Diversification Opportunities for Ultralatin America and Artisan Emerging

0.54

Correlation Coefficient

Ultralatin America  Artisan Emerging

Very weak diversification

The 3 months correlation between Ultralatin and Artisan is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Ultralatin America Profund and Artisan Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Artisan Emerging Markets and Ultralatin America 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 Ultralatin America Profund are associated (or correlated) with Artisan Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Artisan Emerging Markets has no effect on the direction of Ultralatin America i.e., Ultralatin America and Artisan Emerging go up and down completely randomly.

Pair Corralation between Ultralatin America and Artisan Emerging

Assuming the 90 days horizon Ultralatin America Profund is expected to under-perform the Artisan Emerging. In addition to that, Ultralatin America is 10.81 times more volatile than Artisan Emerging Markets. It trades about -0.32 of its total potential returns per unit of risk. Artisan Emerging Markets is currently generating about -0.21 per unit of volatility. If you would invest  1,035  in Artisan Emerging Markets on October 6, 2024 and sell it today you would lose (13.00) from holding Artisan Emerging Markets or give up 1.26% of portfolio value over 90 days.

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

Ultralatin America Profund  vs.  Artisan Emerging Markets

Ultralatin America

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ultralatin America Profund 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 forward 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 Emerging Markets

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Artisan Emerging Markets has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Artisan Emerging is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ultralatin America and Artisan Emerging

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

The idea behind Ultralatin America Profund and Artisan Emerging Markets 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.