Correlation Between Wasatch Small and New Economy
Can any of the company-specific risk be diversified away by investing in both Wasatch Small and New Economy 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 New Economy 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 New Economy Fund, you can compare the effects of market volatilities on Wasatch Small and New Economy 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 New Economy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wasatch Small and New Economy.
Diversification Opportunities for Wasatch Small and New Economy
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Wasatch and New is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Wasatch Small Cap and New Economy Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Economy Fund 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 New Economy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Economy Fund has no effect on the direction of Wasatch Small i.e., Wasatch Small and New Economy go up and down completely randomly.
Pair Corralation between Wasatch Small and New Economy
Assuming the 90 days horizon Wasatch Small Cap is expected to under-perform the New Economy. In addition to that, Wasatch Small is 4.01 times more volatile than New Economy Fund. It trades about -0.21 of its total potential returns per unit of risk. New Economy Fund is currently generating about 0.08 per unit of volatility. If you would invest 6,697 in New Economy Fund on September 14, 2024 and sell it today you would earn a total of 88.00 from holding New Economy Fund or generate 1.31% 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. New Economy Fund
Performance |
| Timeline |
| Wasatch Small Cap |
| New Economy Fund |
Wasatch Small and New Economy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wasatch Small and New Economy
The main advantage of trading using opposite Wasatch Small and New Economy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wasatch Small position performs unexpectedly, New Economy 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 New Economy will offset losses from the drop in New Economy's long position.| Wasatch Small vs. Pace Municipal Fixed | Wasatch Small vs. Blrc Sgy Mnp | Wasatch Small vs. Ab Impact Municipal | Wasatch Small vs. Alliancebernstein National Municipal |
| New Economy vs. Delaware Limited Term Diversified | New Economy vs. Huber Capital Diversified | New Economy vs. Small Cap Stock | New Economy vs. Wasatch Small 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges |