Correlation Between Investec Emerging and Artisan Emerging

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

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

Diversification Opportunities for Investec Emerging and Artisan Emerging

0.58

Correlation Coefficient

Investec Emerging  Artisan Emerging

Very weak diversification

The 3 months correlation between Investec and Artisan is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Investec Emerging Markets 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 Investec Emerging 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 Investec Emerging Markets 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 Investec Emerging i.e., Investec Emerging and Artisan Emerging go up and down completely randomly.

Pair Corralation between Investec Emerging and Artisan Emerging

Assuming the 90 days horizon Investec Emerging Markets is expected to generate 4.12 times more return on investment than Artisan Emerging. However, Investec Emerging is 4.12 times more volatile than Artisan Emerging Markets. It trades about 0.15 of its potential returns per unit of risk. Artisan Emerging Markets is currently generating about 0.23 per unit of risk. If you would invest  1,053  in Investec Emerging Markets on November 29, 2024 and sell it today you would earn a total of  84.00  from holding Investec Emerging Markets or generate 7.98% return on investment over 90 days.

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

Investec Emerging Markets  vs.  Artisan Emerging Markets

Investec Emerging Markets

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Investec Emerging Markets are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Investec Emerging may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Artisan Emerging Markets

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Artisan Emerging Markets are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. 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 Investec Emerging and Artisan Emerging

The main advantage of trading using opposite Investec Emerging and Artisan Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Investec Emerging 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 Investec Emerging Markets 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 Global Correlations module to find global opportunities by holding instruments from different markets.