Correlation Between Kopernik International and Wasatch Greater

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

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

Diversification Opportunities for Kopernik International and Wasatch Greater

-0.39

Correlation Coefficient

Kopernik International  Wasatch Greater

Very good diversification

The 3 months correlation between Kopernik and Wasatch is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Kopernik International Fund 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 Kopernik International 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 Kopernik International Fund 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 Kopernik International i.e., Kopernik International and Wasatch Greater go up and down completely randomly.

Pair Corralation between Kopernik International and Wasatch Greater

Assuming the 90 days horizon Kopernik International Fund is expected to generate 2.3 times more return on investment than Wasatch Greater. However, Kopernik International is 2.3 times more volatile than Wasatch Greater China. It trades about 0.32 of its potential returns per unit of risk. Wasatch Greater China is currently generating about -0.11 per unit of risk. If you would invest  1,268  in Kopernik International Fund on December 29, 2024 and sell it today you would earn a total of  184.00  from holding Kopernik International Fund or generate 14.51% return on investment over 90 days.

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

Kopernik International Fund  vs.  Wasatch Greater China

Kopernik International

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Kopernik International Fund are ranked lower than 25 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Kopernik International showed solid returns over the last few months and may actually be approaching a breakup point.

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 Kopernik International and Wasatch Greater

The main advantage of trading using opposite Kopernik International and Wasatch Greater positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kopernik International 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 Kopernik International Fund 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.