Correlation Between Aggressive Allocation and Artisan Emerging
Can any of the company-specific risk be diversified away by investing in both Aggressive Allocation 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 Aggressive Allocation and Artisan Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aggressive Allocation Fund and Artisan Emerging Markets, you can compare the effects of market volatilities on Aggressive Allocation 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 Aggressive Allocation with a short position of Artisan Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aggressive Allocation and Artisan Emerging.
Diversification Opportunities for Aggressive Allocation and Artisan Emerging
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Aggressive and Artisan is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Aggressive Allocation Fund 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 Aggressive Allocation 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 Aggressive Allocation Fund 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 Aggressive Allocation i.e., Aggressive Allocation and Artisan Emerging go up and down completely randomly.
Pair Corralation between Aggressive Allocation and Artisan Emerging
Assuming the 90 days horizon Aggressive Allocation Fund is expected to generate 3.1 times more return on investment than Artisan Emerging. However, Aggressive Allocation is 3.1 times more volatile than Artisan Emerging Markets. It trades about 0.09 of its potential returns per unit of risk. Artisan Emerging Markets is currently generating about 0.16 per unit of risk. If you would invest 993.00 in Aggressive Allocation Fund on September 3, 2024 and sell it today you would earn a total of 369.00 from holding Aggressive Allocation Fund or generate 37.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aggressive Allocation Fund vs. Artisan Emerging Markets
Performance |
| Timeline |
| Aggressive Allocation |
| Artisan Emerging Markets |
Aggressive Allocation and Artisan Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aggressive Allocation and Artisan Emerging
The main advantage of trading using opposite Aggressive Allocation and Artisan Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aggressive Allocation 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 Aggressive Allocation Fund 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.
| Artisan Emerging vs. Morgan Stanley Emerging | Artisan Emerging vs. Kinetics Market Opportunities | Artisan Emerging vs. Massmutual Select Diversified | Artisan Emerging vs. Barings Emerging Markets |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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