Correlation Between Wasatch Small and Mid Cap
Can any of the company-specific risk be diversified away by investing in both Wasatch Small and Mid 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 Small and Mid Cap 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 Mid Cap Growth, you can compare the effects of market volatilities on Wasatch Small and Mid 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 Small with a short position of Mid Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wasatch Small and Mid Cap.
Diversification Opportunities for Wasatch Small and Mid Cap
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Wasatch and Mid is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Wasatch Small Cap and Mid Cap Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mid Cap Growth 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 Mid Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mid Cap Growth has no effect on the direction of Wasatch Small i.e., Wasatch Small and Mid Cap go up and down completely randomly.
Pair Corralation between Wasatch Small and Mid Cap
Assuming the 90 days horizon Wasatch Small Cap is expected to generate 0.84 times more return on investment than Mid Cap. However, Wasatch Small Cap is 1.19 times less risky than Mid Cap. It trades about 0.27 of its potential returns per unit of risk. Mid Cap Growth is currently generating about 0.18 per unit of risk. If you would invest 4,314 in Wasatch Small Cap on October 24, 2024 and sell it today you would earn a total of 200.00 from holding Wasatch Small Cap or generate 4.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wasatch Small Cap vs. Mid Cap Growth
Performance |
| Timeline |
| Wasatch Small Cap |
| Mid Cap Growth |
Wasatch Small and Mid Cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wasatch Small and Mid Cap
The main advantage of trading using opposite Wasatch Small and Mid Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wasatch Small position performs unexpectedly, Mid 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 Mid Cap will offset losses from the drop in Mid Cap's long position.| Wasatch Small vs. Rbc Small Cap | Wasatch Small vs. Small Pany Growth | Wasatch Small vs. Df Dent Small | Wasatch Small vs. Sp Smallcap 600 |
| Mid Cap vs. Wasatch Small Cap | Mid Cap vs. Victory Trivalent International | Mid Cap vs. John Hancock Disciplined | Mid Cap vs. Mfs Mid 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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