Correlation Between Wasatch Micro and Wasatch Large
Can any of the company-specific risk be diversified away by investing in both Wasatch Micro and Wasatch Large 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 Large 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 Large Cap, you can compare the effects of market volatilities on Wasatch Micro and Wasatch Large 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 Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wasatch Micro and Wasatch Large.
Diversification Opportunities for Wasatch Micro and Wasatch Large
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Wasatch and Wasatch is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Wasatch Micro Cap and Wasatch Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wasatch Large Cap 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 Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wasatch Large Cap has no effect on the direction of Wasatch Micro i.e., Wasatch Micro and Wasatch Large go up and down completely randomly.
Pair Corralation between Wasatch Micro and Wasatch Large
Assuming the 90 days horizon Wasatch Micro Cap is expected to generate 2.27 times more return on investment than Wasatch Large. However, Wasatch Micro is 2.27 times more volatile than Wasatch Large Cap. It trades about 0.07 of its potential returns per unit of risk. Wasatch Large Cap is currently generating about 0.09 per unit of risk. If you would invest 647.00 in Wasatch Micro Cap on September 1, 2024 and sell it today you would earn a total of 239.00 from holding Wasatch Micro Cap or generate 36.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.73% |
| Values | Daily Returns |
Wasatch Micro Cap vs. Wasatch Large Cap
Performance |
| Timeline |
| Wasatch Micro Cap |
| Wasatch Large Cap |
Wasatch Micro and Wasatch Large Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wasatch Micro and Wasatch Large
The main advantage of trading using opposite Wasatch Micro and Wasatch Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wasatch Micro position performs unexpectedly, Wasatch Large 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 Large will offset losses from the drop in Wasatch Large's long position.| Wasatch Micro vs. The Hartford Midcap | Wasatch Micro vs. Mfs Emerging Markets | Wasatch Micro vs. Wells Fargo Special | Wasatch Micro vs. Baron Emerging Markets |
| Wasatch Large vs. Legg Mason Partners | Wasatch Large vs. Transamerica Intermediate Muni | Wasatch Large vs. Ab Global Bond | Wasatch Large vs. Artisan High Income |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
Other Complementary Tools
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities |