Correlation Between American Funds and Wasatch Greater

Can any of the company-specific risk be diversified away by investing in both American Funds and Wasatch Greater 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 American Funds and Wasatch Greater into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between American Funds Global and Wasatch Greater China, you can compare the effects of market volatilities on American Funds and Wasatch Greater 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 American Funds with a short position of Wasatch Greater. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Wasatch Greater.

Diversification Opportunities for American Funds and Wasatch Greater

0.0

Correlation Coefficient

American Funds  Wasatch Greater

Pay attention - limited upside

The 3 months correlation between American and Wasatch is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding American Funds Global and Wasatch Greater China in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wasatch Greater China and American Funds 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 American Funds Global are associated (or correlated) with Wasatch Greater. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wasatch Greater China has no effect on the direction of American Funds i.e., American Funds and Wasatch Greater go up and down completely randomly.

Pair Corralation between American Funds and Wasatch Greater

If you would invest (100.00) in Wasatch Greater China on December 28, 2024 and sell it today you would earn a total of  100.00  from holding Wasatch Greater China or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

American Funds Global  vs.  Wasatch Greater China

American Funds Global

Risk-Adjusted Performance

Very Weak

Over the last 90 days American Funds Global has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, American Funds is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Wasatch Greater China

Risk-Adjusted Performance

Very Weak

Over the last 90 days Wasatch Greater China has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Wasatch Greater is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with American Funds and Wasatch Greater

The main advantage of trading using opposite American Funds and Wasatch Greater positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Wasatch Greater 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 Greater will offset losses from the drop in Wasatch Greater's long position.

The idea behind American Funds Global and Wasatch Greater China pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.