Correlation Between Ford and Artisan Value
Can any of the company-specific risk be diversified away by investing in both Ford and Artisan Value 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 Ford and Artisan Value into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Artisan Value Income, you can compare the effects of market volatilities on Ford and Artisan Value 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 Ford with a short position of Artisan Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Artisan Value.
Diversification Opportunities for Ford and Artisan Value
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ford and Artisan is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Artisan Value Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Artisan Value Income and Ford 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 Ford Motor are associated (or correlated) with Artisan Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Artisan Value Income has no effect on the direction of Ford i.e., Ford and Artisan Value go up and down completely randomly.
Pair Corralation between Ford and Artisan Value
Taking into account the 90-day investment horizon Ford is expected to generate 1.07 times less return on investment than Artisan Value. In addition to that, Ford is 4.52 times more volatile than Artisan Value Income. It trades about 0.04 of its total potential returns per unit of risk. Artisan Value Income is currently generating about 0.2 per unit of volatility. If you would invest 1,073 in Artisan Value Income on August 27, 2024 and sell it today you would earn a total of 27.00 from holding Artisan Value Income or generate 2.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Artisan Value Income
Performance |
| Timeline |
| Ford Motor |
| Artisan Value Income |
Ford and Artisan Value Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Artisan Value
The main advantage of trading using opposite Ford and Artisan Value positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Artisan Value 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 Value will offset losses from the drop in Artisan Value's long position.The idea behind Ford Motor and Artisan Value Income 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.| Artisan Value vs. Artisan Developing World | Artisan Value vs. Artisan Thematic Fund | Artisan Value vs. Artisan Small Cap | Artisan Value vs. Artisan Floating Rate |
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.
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