Correlation Between Wasatch Emerging and Hennessy Japan
Can any of the company-specific risk be diversified away by investing in both Wasatch Emerging and Hennessy Japan 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 Hennessy Japan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wasatch Emerging India and Hennessy Japan Fund, you can compare the effects of market volatilities on Wasatch Emerging and Hennessy Japan 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 Hennessy Japan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wasatch Emerging and Hennessy Japan.
Diversification Opportunities for Wasatch Emerging and Hennessy Japan
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Wasatch and Hennessy is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Wasatch Emerging India and Hennessy Japan Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hennessy Japan 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 India are associated (or correlated) with Hennessy Japan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hennessy Japan has no effect on the direction of Wasatch Emerging i.e., Wasatch Emerging and Hennessy Japan go up and down completely randomly.
Pair Corralation between Wasatch Emerging and Hennessy Japan
Assuming the 90 days horizon Wasatch Emerging India is expected to generate 0.63 times more return on investment than Hennessy Japan. However, Wasatch Emerging India is 1.59 times less risky than Hennessy Japan. It trades about -0.01 of its potential returns per unit of risk. Hennessy Japan Fund is currently generating about -0.03 per unit of risk. If you would invest 698.00 in Wasatch Emerging India on August 29, 2024 and sell it today you would lose (5.00) from holding Wasatch Emerging India or give up 0.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wasatch Emerging India vs. Hennessy Japan Fund
Performance |
| Timeline |
| Wasatch Emerging India |
| Hennessy Japan |
Wasatch Emerging and Hennessy Japan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wasatch Emerging and Hennessy Japan
The main advantage of trading using opposite Wasatch Emerging and Hennessy Japan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wasatch Emerging position performs unexpectedly, Hennessy Japan 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 Hennessy Japan will offset losses from the drop in Hennessy Japan's long position.| Wasatch Emerging vs. Matthews India Fund | Wasatch Emerging vs. Wasatch Emerging Markets | Wasatch Emerging vs. Wasatch Emerging Markets | Wasatch Emerging vs. iShares MSCI India |
| Hennessy Japan vs. Hennessy Japan Small | Hennessy Japan vs. Hennessy Japan Fund | Hennessy Japan vs. Matthews Japan Fund | Hennessy Japan vs. Matthews Japan 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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