Correlation Between Wasatch Micro and Wasatch Strategic
Can any of the company-specific risk be diversified away by investing in both Wasatch Micro and Wasatch Strategic 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 Micro and Wasatch Strategic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wasatch Micro Cap and Wasatch Strategic Income, you can compare the effects of market volatilities on Wasatch Micro and Wasatch Strategic 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 Micro with a short position of Wasatch Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wasatch Micro and Wasatch Strategic.
Diversification Opportunities for Wasatch Micro and Wasatch Strategic
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Wasatch and Wasatch is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Wasatch Micro Cap and Wasatch Strategic Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wasatch Strategic Income and Wasatch Micro 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 Micro Cap are associated (or correlated) with Wasatch Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wasatch Strategic Income has no effect on the direction of Wasatch Micro i.e., Wasatch Micro and Wasatch Strategic go up and down completely randomly.
Pair Corralation between Wasatch Micro and Wasatch Strategic
Assuming the 90 days horizon Wasatch Micro Cap is expected to generate 3.45 times more return on investment than Wasatch Strategic. However, Wasatch Micro is 3.45 times more volatile than Wasatch Strategic Income. It trades about 0.43 of its potential returns per unit of risk. Wasatch Strategic Income is currently generating about 0.28 per unit of risk. If you would invest 390.00 in Wasatch Micro Cap on September 3, 2024 and sell it today you would earn a total of 56.00 from holding Wasatch Micro Cap or generate 14.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wasatch Micro Cap vs. Wasatch Strategic Income
Performance |
| Timeline |
| Wasatch Micro Cap |
| Wasatch Strategic Income |
Wasatch Micro and Wasatch Strategic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wasatch Micro and Wasatch Strategic
The main advantage of trading using opposite Wasatch Micro and Wasatch Strategic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wasatch Micro position performs unexpectedly, Wasatch Strategic 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 Strategic will offset losses from the drop in Wasatch Strategic's long position.| Wasatch Micro vs. The Hartford Midcap | Wasatch Micro vs. Mfs Emerging Markets | Wasatch Micro vs. Wells Fargo Special | Wasatch Micro vs. Washington Mutual Investors |
| Wasatch Strategic vs. Wasatch World Innovators | Wasatch Strategic vs. Wasatch International Growth | Wasatch Strategic vs. Wasatch International Opportunities | Wasatch Strategic 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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