Correlation Between Wasatch Emerging and Wasatch E

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

Diversification Opportunities for Wasatch Emerging and Wasatch E

0.45

Correlation Coefficient

Wasatch Emerging  Wasatch E

Very weak diversification

The 3 months correlation between Wasatch and Wasatch is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Wasatch Emerging Markets and Wasatch E Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wasatch E 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 E. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wasatch E Growth has no effect on the direction of Wasatch Emerging i.e., Wasatch Emerging and Wasatch E go up and down completely randomly.

Pair Corralation between Wasatch Emerging and Wasatch E

Assuming the 90 days horizon Wasatch Emerging is expected to generate 2.53 times less return on investment than Wasatch E. But when comparing it to its historical volatility, Wasatch Emerging Markets is 1.38 times less risky than Wasatch E. It trades about 0.02 of its potential returns per unit of risk. Wasatch E Growth is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  7,820  in Wasatch E Growth on October 25, 2024 and sell it today you would earn a total of  1,962  from holding Wasatch E Growth or generate 25.09% return on investment over 90 days.

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

Wasatch Emerging Markets  vs.  Wasatch E 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 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 E Growth

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wasatch E Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Wasatch E 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 Wasatch E

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

The idea behind Wasatch Emerging Markets and Wasatch E 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.

Check out your portfolio center.

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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.