Correlation Between Astar and Wasatch Small
Can any of the company-specific risk be diversified away by investing in both Astar and Wasatch Small 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 Astar and Wasatch Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Astar and Wasatch Small Cap, you can compare the effects of market volatilities on Astar and Wasatch Small 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 Astar with a short position of Wasatch Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Astar and Wasatch Small.
Diversification Opportunities for Astar and Wasatch Small
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Astar and Wasatch is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Astar and Wasatch Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wasatch Small Cap and Astar 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 Astar are associated (or correlated) with Wasatch Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wasatch Small Cap has no effect on the direction of Astar i.e., Astar and Wasatch Small go up and down completely randomly.
Pair Corralation between Astar and Wasatch Small
Assuming the 90 days trading horizon Astar is expected to generate 6.9 times more return on investment than Wasatch Small. However, Astar is 6.9 times more volatile than Wasatch Small Cap. It trades about 0.01 of its potential returns per unit of risk. Wasatch Small Cap is currently generating about 0.05 per unit of risk. If you would invest 7.90 in Astar on November 2, 2024 and sell it today you would lose (2.93) from holding Astar or give up 37.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 60.32% |
| Values | Daily Returns |
Astar vs. Wasatch Small Cap
Performance |
| Timeline |
| Astar |
| Wasatch Small Cap |
Astar and Wasatch Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Astar and Wasatch Small
The main advantage of trading using opposite Astar and Wasatch Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Astar position performs unexpectedly, Wasatch Small 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 Wasatch Small will offset losses from the drop in Wasatch Small's long position.The idea behind Astar and Wasatch Small Cap 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.| Wasatch Small vs. Wasatch E Growth | Wasatch Small vs. Wasatch Small Cap | Wasatch Small vs. Wasatch Micro Cap | Wasatch Small vs. Wasatch Ultra Growth |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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