Correlation Between Saat Defensive and Wasatch Global
Can any of the company-specific risk be diversified away by investing in both Saat Defensive 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 Saat Defensive and Wasatch Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Saat Defensive Strategy and Wasatch Global Opportunities, you can compare the effects of market volatilities on Saat Defensive 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 Saat Defensive with a short position of Wasatch Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Saat Defensive and Wasatch Global.
Diversification Opportunities for Saat Defensive and Wasatch Global
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Saat and Wasatch is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Saat Defensive Strategy 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 Saat Defensive 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 Saat Defensive Strategy 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 Saat Defensive i.e., Saat Defensive and Wasatch Global go up and down completely randomly.
Pair Corralation between Saat Defensive and Wasatch Global
Assuming the 90 days horizon Saat Defensive is expected to generate 15.51 times less return on investment than Wasatch Global. But when comparing it to its historical volatility, Saat Defensive Strategy is 26.78 times less risky than Wasatch Global. It trades about 0.54 of its potential returns per unit of risk. Wasatch Global Opportunities is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 470.00 in Wasatch Global Opportunities on September 1, 2024 and sell it today you would earn a total of 33.00 from holding Wasatch Global Opportunities or generate 7.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Saat Defensive Strategy vs. Wasatch Global Opportunities
Performance |
| Timeline |
| Saat Defensive Strategy |
| Wasatch Global Oppor |
Saat Defensive and Wasatch Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Saat Defensive and Wasatch Global
The main advantage of trading using opposite Saat Defensive and Wasatch Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Saat Defensive 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.| Saat Defensive vs. Fidelity Small Cap | Saat Defensive vs. Royce Opportunity Fund | Saat Defensive vs. Vanguard Small Cap Value | Saat Defensive vs. Heartland Value Plus |
| Wasatch Global vs. Wasatch Large Cap | Wasatch Global vs. Wasatch Micro Cap | Wasatch Global vs. Wasatch Ultra Growth | Wasatch Global vs. Wasatch Micro 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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