Correlation Between Wasatch Micro and Vanguard Small-cap
Can any of the company-specific risk be diversified away by investing in both Wasatch Micro and Vanguard Small-cap 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 Vanguard Small-cap 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 Vanguard Small Cap Growth, you can compare the effects of market volatilities on Wasatch Micro and Vanguard Small-cap 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 Vanguard Small-cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wasatch Micro and Vanguard Small-cap.
Diversification Opportunities for Wasatch Micro and Vanguard Small-cap
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Wasatch and Vanguard is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Wasatch Micro Cap and Vanguard Small Cap Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Small 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 Vanguard Small-cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Small Cap has no effect on the direction of Wasatch Micro i.e., Wasatch Micro and Vanguard Small-cap go up and down completely randomly.
Pair Corralation between Wasatch Micro and Vanguard Small-cap
Assuming the 90 days horizon Wasatch Micro Cap is expected to generate 1.16 times more return on investment than Vanguard Small-cap. However, Wasatch Micro is 1.16 times more volatile than Vanguard Small Cap Growth. It trades about 0.33 of its potential returns per unit of risk. Vanguard Small Cap Growth is currently generating about 0.36 per unit of risk. If you would invest 400.00 in Wasatch Micro Cap on August 28, 2024 and sell it today you would earn a total of 46.00 from holding Wasatch Micro Cap or generate 11.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wasatch Micro Cap vs. Vanguard Small Cap Growth
Performance |
| Timeline |
| Wasatch Micro Cap |
| Vanguard Small Cap |
Wasatch Micro and Vanguard Small-cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wasatch Micro and Vanguard Small-cap
The main advantage of trading using opposite Wasatch Micro and Vanguard Small-cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wasatch Micro position performs unexpectedly, Vanguard Small-cap 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 Vanguard Small-cap will offset losses from the drop in Vanguard Small-cap's long position.| Wasatch Micro vs. Ips Strategic Capital | Wasatch Micro vs. Qs Growth Fund | Wasatch Micro vs. Omni Small Cap Value | Wasatch Micro vs. Qs Large 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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