Correlation Between Wasatch Small and Bny Mellon

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

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

Diversification Opportunities for Wasatch Small and Bny Mellon

0.36

Correlation Coefficient

Wasatch Small  Bny Mellon

Weak diversification

The 3 months correlation between Wasatch and Bny is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Wasatch Small Cap and Bny Mellon Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bny Mellon Short and Wasatch Small 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 Small Cap are associated (or correlated) with Bny Mellon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bny Mellon Short has no effect on the direction of Wasatch Small i.e., Wasatch Small and Bny Mellon go up and down completely randomly.

Pair Corralation between Wasatch Small and Bny Mellon

Assuming the 90 days horizon Wasatch Small is expected to generate 1.78 times less return on investment than Bny Mellon. In addition to that, Wasatch Small is 9.95 times more volatile than Bny Mellon Short. It trades about 0.01 of its total potential returns per unit of risk. Bny Mellon Short is currently generating about 0.14 per unit of volatility. If you would invest  915.00  in Bny Mellon Short on October 5, 2024 and sell it today you would earn a total of  56.00  from holding Bny Mellon Short or generate 6.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.63%
Values	Daily Returns

Wasatch Small Cap  vs.  Bny Mellon Short

Wasatch Small Cap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wasatch Small Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Bny Mellon Short

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bny Mellon Short has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Bny Mellon 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 Small and Bny Mellon

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

The idea behind Wasatch Small Cap and Bny Mellon Short 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.