Correlation Between Wasatch Frontier and Frontier Markets
Can any of the company-specific risk be diversified away by investing in both Wasatch Frontier and Frontier Markets 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 Frontier and Frontier Markets into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wasatch Frontier Emerging and Frontier Markets Portfolio, you can compare the effects of market volatilities on Wasatch Frontier and Frontier Markets 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 Frontier with a short position of Frontier Markets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wasatch Frontier and Frontier Markets.
Diversification Opportunities for Wasatch Frontier and Frontier Markets
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Wasatch and Frontier is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Wasatch Frontier Emerging and Frontier Markets Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Frontier Markets Por and Wasatch Frontier 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 Frontier Emerging are associated (or correlated) with Frontier Markets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Frontier Markets Por has no effect on the direction of Wasatch Frontier i.e., Wasatch Frontier and Frontier Markets go up and down completely randomly.
Pair Corralation between Wasatch Frontier and Frontier Markets
Assuming the 90 days horizon Wasatch Frontier Emerging is expected to generate 1.75 times more return on investment than Frontier Markets. However, Wasatch Frontier is 1.75 times more volatile than Frontier Markets Portfolio. It trades about 0.18 of its potential returns per unit of risk. Frontier Markets Portfolio is currently generating about -0.03 per unit of risk. If you would invest 346.00 in Wasatch Frontier Emerging on October 24, 2024 and sell it today you would earn a total of 8.00 from holding Wasatch Frontier Emerging or generate 2.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wasatch Frontier Emerging vs. Frontier Markets Portfolio
Performance |
| Timeline |
| Wasatch Frontier Emerging |
| Frontier Markets Por |
Wasatch Frontier and Frontier Markets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wasatch Frontier and Frontier Markets
The main advantage of trading using opposite Wasatch Frontier and Frontier Markets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wasatch Frontier position performs unexpectedly, Frontier Markets 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 Frontier Markets will offset losses from the drop in Frontier Markets' long position.| Wasatch Frontier vs. Wasatch Emerging Markets | Wasatch Frontier vs. Wasatch International Opportunities | Wasatch Frontier vs. Wasatch Global Opportunities | Wasatch Frontier vs. Wasatch Micro Cap |
| Frontier Markets vs. Frontier Markets Portfolio | Frontier Markets vs. Hennessy Japan Fund | Frontier Markets vs. Hennessy Japan Fund | Frontier Markets vs. Hennessy Japan Small |
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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