Correlation Between Wasatch Small and Mid-cap Profund

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

Diversification Opportunities for Wasatch Small and Mid-cap Profund

0.54

Correlation Coefficient

Wasatch Small  Mid-cap Profund

Very weak diversification

The 3 months correlation between Wasatch and Mid-cap is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Wasatch Small Cap and Mid Cap Profund Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mid Cap Profund 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 Mid-cap Profund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mid Cap Profund has no effect on the direction of Wasatch Small i.e., Wasatch Small and Mid-cap Profund go up and down completely randomly.

Pair Corralation between Wasatch Small and Mid-cap Profund

Assuming the 90 days horizon Wasatch Small Cap is expected to under-perform the Mid-cap Profund. In addition to that, Wasatch Small is 2.13 times more volatile than Mid Cap Profund Mid Cap. It trades about -0.1 of its total potential returns per unit of risk. Mid Cap Profund Mid Cap is currently generating about 0.01 per unit of volatility. If you would invest  9,644  in Mid Cap Profund Mid Cap on October 5, 2024 and sell it today you would earn a total of  21.00  from holding Mid Cap Profund Mid Cap or generate 0.22% return on investment over 90 days.

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

Wasatch Small Cap  vs.  Mid Cap Profund Mid Cap

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.

Mid Cap Profund

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mid Cap Profund Mid Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Mid-cap Profund 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 Mid-cap Profund

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

The idea behind Wasatch Small Cap and Mid Cap Profund Mid Cap 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.