Correlation Between Equity Series and Wasatch Large

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

By analyzing existing cross correlation between Equity Series Class and Wasatch Large Cap, you can compare the effects of market volatilities on Equity Series and Wasatch Large 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 Equity Series with a short position of Wasatch Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Equity Series and Wasatch Large.

Diversification Opportunities for Equity Series and Wasatch Large

-0.5

Correlation Coefficient

Equity Series  Wasatch Large

Very good diversification

The 3 months correlation between Equity and Wasatch is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Equity Series Class and Wasatch Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wasatch Large Cap and Equity Series 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 Equity Series Class are associated (or correlated) with Wasatch Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wasatch Large Cap has no effect on the direction of Equity Series i.e., Equity Series and Wasatch Large go up and down completely randomly.

Pair Corralation between Equity Series and Wasatch Large

Assuming the 90 days horizon Equity Series Class is expected to under-perform the Wasatch Large. In addition to that, Equity Series is 1.6 times more volatile than Wasatch Large Cap. It trades about -0.11 of its total potential returns per unit of risk. Wasatch Large Cap is currently generating about 0.29 per unit of volatility. If you would invest  897.00  in Wasatch Large Cap on December 29, 2024 and sell it today you would earn a total of  101.00  from holding Wasatch Large Cap or generate 11.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Equity Series Class  vs.  Wasatch Large Cap

Equity Series Class

Risk-Adjusted Performance

Very Weak

Over the last 90 days Equity Series Class has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Wasatch Large Cap

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Wasatch Large Cap are ranked lower than 22 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Wasatch Large may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Equity Series and Wasatch Large

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

The idea behind Equity Series Class and Wasatch Large Cap 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.