Correlation Between Investec Emerging and Artisan Thematic

Can any of the company-specific risk be diversified away by investing in both Investec Emerging and Artisan Thematic 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 Thematic 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 Thematic Fund, you can compare the effects of market volatilities on Investec Emerging and Artisan Thematic 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 Thematic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Investec Emerging and Artisan Thematic.

Diversification Opportunities for Investec Emerging and Artisan Thematic

0.19

Correlation Coefficient

Investec Emerging  Artisan Thematic

Average diversification

The 3 months correlation between Investec and Artisan is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Investec Emerging Markets and Artisan Thematic Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Artisan Thematic 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 Thematic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Artisan Thematic has no effect on the direction of Investec Emerging i.e., Investec Emerging and Artisan Thematic go up and down completely randomly.

Pair Corralation between Investec Emerging and Artisan Thematic

Assuming the 90 days horizon Investec Emerging is expected to generate 6.15 times less return on investment than Artisan Thematic. But when comparing it to its historical volatility, Investec Emerging Markets is 1.52 times less risky than Artisan Thematic. It trades about 0.06 of its potential returns per unit of risk. Artisan Thematic Fund is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  2,246  in Artisan Thematic Fund on October 25, 2024 and sell it today you would earn a total of  124.00  from holding Artisan Thematic Fund or generate 5.52% return on investment over 90 days.

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

Investec Emerging Markets  vs.  Artisan Thematic Fund

Investec Emerging Markets

Risk-Adjusted Performance

0 of 100

Very Weak

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

Artisan Thematic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Artisan Thematic Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Artisan Thematic 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 Thematic

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

The idea behind Investec Emerging Markets and Artisan Thematic 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.