Correlation Between Wasatch Small and Cullen High
Can any of the company-specific risk be diversified away by investing in both Wasatch Small and Cullen High 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 Wasatch Small and Cullen High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wasatch Small Cap and Cullen High Dividend, you can compare the effects of market volatilities on Wasatch Small and Cullen High 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 Wasatch Small with a short position of Cullen High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wasatch Small and Cullen High.
Diversification Opportunities for Wasatch Small and Cullen High
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Wasatch and Cullen is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Wasatch Small Cap and Cullen High Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cullen High Dividend and Wasatch Small 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 Wasatch Small Cap are associated (or correlated) with Cullen High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cullen High Dividend has no effect on the direction of Wasatch Small i.e., Wasatch Small and Cullen High go up and down completely randomly.
Pair Corralation between Wasatch Small and Cullen High
Assuming the 90 days horizon Wasatch Small Cap is expected to generate 2.55 times more return on investment than Cullen High. However, Wasatch Small is 2.55 times more volatile than Cullen High Dividend. It trades about 0.39 of its potential returns per unit of risk. Cullen High Dividend is currently generating about 0.17 per unit of risk. If you would invest 3,960 in Wasatch Small Cap on September 1, 2024 and sell it today you would earn a total of 498.00 from holding Wasatch Small Cap or generate 12.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wasatch Small Cap vs. Cullen High Dividend
Performance |
| Timeline |
| Wasatch Small Cap |
| Cullen High Dividend |
Wasatch Small and Cullen High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wasatch Small and Cullen High
The main advantage of trading using opposite Wasatch Small and Cullen High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wasatch Small position performs unexpectedly, Cullen High 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 Cullen High will offset losses from the drop in Cullen High's long position.| Wasatch Small vs. Wasatch E Growth | Wasatch Small vs. Wasatch Small Cap | Wasatch Small vs. Wasatch Micro Cap | Wasatch Small vs. Wasatch Ultra Growth |
| Cullen High vs. The Value Fund | Cullen High vs. Lazard Global Listed | Cullen High vs. Lazard International Strategic | Cullen High vs. Tcw Relative Value |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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