Correlation Between Wasatch Emerging and Wasatch Micro
Can any of the company-specific risk be diversified away by investing in both Wasatch Emerging and Wasatch Micro 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 Emerging and Wasatch Micro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wasatch Emerging Markets and Wasatch Micro Cap, you can compare the effects of market volatilities on Wasatch Emerging and Wasatch Micro 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 Emerging with a short position of Wasatch Micro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wasatch Emerging and Wasatch Micro.
Diversification Opportunities for Wasatch Emerging and Wasatch Micro
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Wasatch and Wasatch is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Wasatch Emerging Markets and Wasatch Micro Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wasatch Micro Cap and Wasatch Emerging 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 Emerging Markets are associated (or correlated) with Wasatch Micro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wasatch Micro Cap has no effect on the direction of Wasatch Emerging i.e., Wasatch Emerging and Wasatch Micro go up and down completely randomly.
Pair Corralation between Wasatch Emerging and Wasatch Micro
Assuming the 90 days horizon Wasatch Emerging is expected to generate 5.13 times less return on investment than Wasatch Micro. But when comparing it to its historical volatility, Wasatch Emerging Markets is 1.37 times less risky than Wasatch Micro. It trades about 0.04 of its potential returns per unit of risk. Wasatch Micro Cap is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 357.00 in Wasatch Micro Cap on September 3, 2024 and sell it today you would earn a total of 89.00 from holding Wasatch Micro Cap or generate 24.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wasatch Emerging Markets vs. Wasatch Micro Cap
Performance |
| Timeline |
| Wasatch Emerging Markets |
| Wasatch Micro Cap |
Wasatch Emerging and Wasatch Micro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wasatch Emerging and Wasatch Micro
The main advantage of trading using opposite Wasatch Emerging and Wasatch Micro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wasatch Emerging position performs unexpectedly, Wasatch Micro 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 Micro will offset losses from the drop in Wasatch Micro's long position.| Wasatch Emerging vs. Franklin Mutual Global | Wasatch Emerging vs. Templeton Growth Fund | Wasatch Emerging vs. Franklin Real Estate | Wasatch Emerging vs. HUMANA INC |
| Wasatch Micro vs. The Hartford Midcap | Wasatch Micro vs. Mfs Emerging Markets | Wasatch Micro vs. Wells Fargo Special | Wasatch Micro vs. Washington Mutual Investors |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
Other Complementary Tools
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities |