Correlation Between Artisan Emerging and California Bond
Can any of the company-specific risk be diversified away by investing in both Artisan Emerging and California Bond 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 Artisan Emerging and California Bond into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Artisan Emerging Markets and California Bond Fund, you can compare the effects of market volatilities on Artisan Emerging and California Bond 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 Artisan Emerging with a short position of California Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Artisan Emerging and California Bond.
Diversification Opportunities for Artisan Emerging and California Bond
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Artisan and California is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Artisan Emerging Markets and California Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on California Bond and Artisan 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 Artisan Emerging Markets are associated (or correlated) with California Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of California Bond has no effect on the direction of Artisan Emerging i.e., Artisan Emerging and California Bond go up and down completely randomly.
Pair Corralation between Artisan Emerging and California Bond
Assuming the 90 days horizon Artisan Emerging is expected to generate 1.67 times less return on investment than California Bond. But when comparing it to its historical volatility, Artisan Emerging Markets is 1.84 times less risky than California Bond. It trades about 0.22 of its potential returns per unit of risk. California Bond Fund is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 1,032 in California Bond Fund on August 28, 2024 and sell it today you would earn a total of 15.00 from holding California Bond Fund or generate 1.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Artisan Emerging Markets vs. California Bond Fund
Performance |
| Timeline |
| Artisan Emerging Markets |
| California Bond |
Artisan Emerging and California Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Artisan Emerging and California Bond
The main advantage of trading using opposite Artisan Emerging and California Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Artisan Emerging position performs unexpectedly, California Bond 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 California Bond will offset losses from the drop in California Bond's long position.| Artisan Emerging vs. Artisan Value Income | Artisan Emerging vs. Artisan Developing World | Artisan Emerging vs. Artisan Thematic Fund | Artisan Emerging vs. Artisan Small Cap |
| California Bond vs. Nuveen Minnesota Municipal | California Bond vs. Morningstar Defensive Bond | California Bond vs. Intermediate Term Bond Fund | California Bond vs. Ishares Municipal Bond |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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