Correlation Between Wasatch Small and Aam Select
Can any of the company-specific risk be diversified away by investing in both Wasatch Small and Aam Select 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 Small and Aam Select into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wasatch Small Cap and Aam Select Income, you can compare the effects of market volatilities on Wasatch Small and Aam Select 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 Small with a short position of Aam Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wasatch Small and Aam Select.
Diversification Opportunities for Wasatch Small and Aam Select
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Wasatch and Aam is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Wasatch Small Cap and Aam Select Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aam Select Income and Wasatch Small 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 Small Cap are associated (or correlated) with Aam Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aam Select Income has no effect on the direction of Wasatch Small i.e., Wasatch Small and Aam Select go up and down completely randomly.
Pair Corralation between Wasatch Small and Aam Select
Assuming the 90 days horizon Wasatch Small Cap is expected to generate 3.12 times more return on investment than Aam Select. However, Wasatch Small is 3.12 times more volatile than Aam Select Income. It trades about 0.08 of its potential returns per unit of risk. Aam Select Income is currently generating about 0.08 per unit of risk. If you would invest 3,493 in Wasatch Small Cap on August 29, 2024 and sell it today you would earn a total of 1,046 from holding Wasatch Small Cap or generate 29.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wasatch Small Cap vs. Aam Select Income
Performance |
| Timeline |
| Wasatch Small Cap |
| Aam Select Income |
Wasatch Small and Aam Select Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wasatch Small and Aam Select
The main advantage of trading using opposite Wasatch Small and Aam Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wasatch Small position performs unexpectedly, Aam Select 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 Aam Select will offset losses from the drop in Aam Select's long position.| Wasatch Small vs. Aam Select Income | Wasatch Small vs. Western Asset Municipal | Wasatch Small vs. Iaadx | Wasatch Small vs. Rbb Fund |
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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