Correlation Between Wasatch Emerging and Wasatch Ultra

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

Diversification Opportunities for Wasatch Emerging and Wasatch Ultra

-0.46

Correlation Coefficient

Wasatch Emerging  Wasatch Ultra

Very good diversification

The 3 months correlation between Wasatch and Wasatch is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Wasatch Emerging Markets and Wasatch Ultra Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wasatch Ultra Growth 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 Wasatch Ultra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wasatch Ultra Growth has no effect on the direction of Wasatch Emerging i.e., Wasatch Emerging and Wasatch Ultra go up and down completely randomly.

Pair Corralation between Wasatch Emerging and Wasatch Ultra

Assuming the 90 days horizon Wasatch Emerging Markets is expected to under-perform the Wasatch Ultra. But the mutual fund apears to be less risky and, when comparing its historical volatility, Wasatch Emerging Markets is 1.37 times less risky than Wasatch Ultra. The mutual fund trades about -0.03 of its potential returns per unit of risk. The Wasatch Ultra Growth is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  3,262  in Wasatch Ultra Growth on September 3, 2024 and sell it today you would earn a total of  523.00  from holding Wasatch Ultra Growth or generate 16.03% return on investment over 90 days.

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

Wasatch Emerging Markets  vs.  Wasatch Ultra Growth

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.

Wasatch Ultra Growth

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Wasatch Ultra Growth are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Wasatch Ultra showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Wasatch Emerging and Wasatch Ultra

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

The idea behind Wasatch Emerging Markets and Wasatch Ultra Growth 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.