Correlation Between Wasatch Emerging and Intrepid Endurance

Can any of the company-specific risk be diversified away by investing in both Wasatch Emerging and Intrepid Endurance 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 Intrepid Endurance 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 Intrepid Endurance Fund, you can compare the effects of market volatilities on Wasatch Emerging and Intrepid Endurance 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 Intrepid Endurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wasatch Emerging and Intrepid Endurance.

Diversification Opportunities for Wasatch Emerging and Intrepid Endurance

0.18

Correlation Coefficient

Wasatch Emerging  Intrepid Endurance

Average diversification

The 3 months correlation between Wasatch and Intrepid is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Wasatch Emerging Markets and Intrepid Endurance Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intrepid Endurance 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 Intrepid Endurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intrepid Endurance has no effect on the direction of Wasatch Emerging i.e., Wasatch Emerging and Intrepid Endurance go up and down completely randomly.

Pair Corralation between Wasatch Emerging and Intrepid Endurance

Assuming the 90 days horizon Wasatch Emerging Markets is expected to under-perform the Intrepid Endurance. But the mutual fund apears to be less risky and, when comparing its historical volatility, Wasatch Emerging Markets is 1.02 times less risky than Intrepid Endurance. The mutual fund trades about -0.03 of its potential returns per unit of risk. The Intrepid Endurance Fund is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,597  in Intrepid Endurance Fund on September 3, 2024 and sell it today you would earn a total of  28.00  from holding Intrepid Endurance Fund or generate 1.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.31%
Values	Daily Returns

Wasatch Emerging Markets  vs.  Intrepid Endurance Fund

Wasatch Emerging Markets

Risk-Adjusted Performance

0 of 100

Very Weak

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

Intrepid Endurance

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Intrepid Endurance Fund are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Intrepid Endurance is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Wasatch Emerging and Intrepid Endurance

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

The idea behind Wasatch Emerging Markets and Intrepid Endurance Fund 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.