Correlation Between Wasatch Emerging and Wasatch Greater
Can any of the company-specific risk be diversified away by investing in both Wasatch Emerging and Wasatch Greater 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 Emerging and Wasatch Greater into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wasatch Emerging Markets and Wasatch Greater China, you can compare the effects of market volatilities on Wasatch Emerging and Wasatch Greater 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 Emerging with a short position of Wasatch Greater. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wasatch Emerging and Wasatch Greater.
Diversification Opportunities for Wasatch Emerging and Wasatch Greater
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Wasatch and Wasatch is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Wasatch Emerging Markets and Wasatch Greater China in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wasatch Greater China and Wasatch Emerging 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 Emerging Markets are associated (or correlated) with Wasatch Greater. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wasatch Greater China has no effect on the direction of Wasatch Emerging i.e., Wasatch Emerging and Wasatch Greater go up and down completely randomly.
Pair Corralation between Wasatch Emerging and Wasatch Greater
Assuming the 90 days horizon Wasatch Emerging Markets is expected to generate 0.46 times more return on investment than Wasatch Greater. However, Wasatch Emerging Markets is 2.19 times less risky than Wasatch Greater. It trades about -0.19 of its potential returns per unit of risk. Wasatch Greater China is currently generating about -0.1 per unit of risk. If you would invest 1,780 in Wasatch Emerging Markets on September 1, 2024 and sell it today you would lose (61.00) from holding Wasatch Emerging Markets or give up 3.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Wasatch Emerging Markets vs. Wasatch Greater China
Performance |
| Timeline |
| Wasatch Emerging Markets |
| Wasatch Greater China |
Wasatch Emerging and Wasatch Greater Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wasatch Emerging and Wasatch Greater
The main advantage of trading using opposite Wasatch Emerging and Wasatch Greater positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wasatch Emerging position performs unexpectedly, Wasatch Greater 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 Greater will offset losses from the drop in Wasatch Greater's long position.| Wasatch Emerging vs. Wasatch Emerging India | Wasatch Emerging vs. Wasatch Emerging Markets | Wasatch Emerging vs. Wasatch Frontier Emerging | Wasatch Emerging vs. Wasatch Global Opportunities |
| Wasatch Greater vs. Wasatch Global Opportunities | Wasatch Greater vs. Wasatch Emerging India | Wasatch Greater vs. Wasatch Micro Cap | Wasatch Greater vs. Wasatch Emerging Markets |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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