Correlation Between GM and Artisan Value
Can any of the company-specific risk be diversified away by investing in both GM 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 GM and Artisan Value into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Artisan Value Fund, you can compare the effects of market volatilities on GM 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 GM with a short position of Artisan Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Artisan Value.
Diversification Opportunities for GM and Artisan Value
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between GM and Artisan is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Artisan Value Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Artisan Value and GM 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 General Motors 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 has no effect on the direction of GM i.e., GM and Artisan Value go up and down completely randomly.
Pair Corralation between GM and Artisan Value
Allowing for the 90-day total investment horizon General Motors is expected to generate 2.81 times more return on investment than Artisan Value. However, GM is 2.81 times more volatile than Artisan Value Fund. It trades about 0.28 of its potential returns per unit of risk. Artisan Value Fund is currently generating about 0.2 per unit of risk. If you would invest 5,207 in General Motors on August 26, 2024 and sell it today you would earn a total of 646.00 from holding General Motors or generate 12.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Artisan Value Fund
Performance |
| Timeline |
| General Motors |
| Artisan Value |
GM and Artisan Value Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Artisan Value
The main advantage of trading using opposite GM and Artisan Value positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM 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 General Motors and Artisan Value 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.| Artisan Value vs. Artisan Value Income | Artisan Value vs. Artisan Developing World | Artisan Value vs. Artisan Thematic Fund | Artisan Value vs. Artisan Small Cap |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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