Correlation Between Smallcap World and Wasatch Global
Can any of the company-specific risk be diversified away by investing in both Smallcap World and Wasatch Global 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 Smallcap World and Wasatch Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Smallcap World Fund and Wasatch Global Opportunities, you can compare the effects of market volatilities on Smallcap World and Wasatch Global 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 Smallcap World with a short position of Wasatch Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smallcap World and Wasatch Global.
Diversification Opportunities for Smallcap World and Wasatch Global
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Smallcap and Wasatch is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Smallcap World Fund and Wasatch Global Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wasatch Global Oppor and Smallcap World 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 Smallcap World Fund are associated (or correlated) with Wasatch Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wasatch Global Oppor has no effect on the direction of Smallcap World i.e., Smallcap World and Wasatch Global go up and down completely randomly.
Pair Corralation between Smallcap World and Wasatch Global
Assuming the 90 days horizon Smallcap World is expected to generate 2.02 times less return on investment than Wasatch Global. But when comparing it to its historical volatility, Smallcap World Fund is 1.19 times less risky than Wasatch Global. It trades about 0.14 of its potential returns per unit of risk. Wasatch Global Opportunities is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 475.00 in Wasatch Global Opportunities on August 31, 2024 and sell it today you would earn a total of 26.00 from holding Wasatch Global Opportunities or generate 5.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Smallcap World Fund vs. Wasatch Global Opportunities
Performance |
| Timeline |
| Smallcap World |
| Wasatch Global Oppor |
Smallcap World and Wasatch Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smallcap World and Wasatch Global
The main advantage of trading using opposite Smallcap World and Wasatch Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smallcap World position performs unexpectedly, Wasatch Global 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 Global will offset losses from the drop in Wasatch Global's long position.| Smallcap World vs. New World Fund | Smallcap World vs. Washington Mutual Investors | Smallcap World vs. Europacific Growth Fund | Smallcap World vs. New Perspective Fund |
| Wasatch Global vs. American Funds Smallcap | Wasatch Global vs. Smallcap World Fund | Wasatch Global vs. Smallcap World Fund | Wasatch Global vs. Smallcap World Fund |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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