Correlation Between Driehaus Small and Wasatch International

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

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

Diversification Opportunities for Driehaus Small and Wasatch International

-0.38

Correlation Coefficient

Driehaus Small  Wasatch International

Very good diversification

The 3 months correlation between Driehaus and Wasatch is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Driehaus Small Cap and Wasatch International Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wasatch International and Driehaus 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 Driehaus Small Cap are associated (or correlated) with Wasatch International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wasatch International has no effect on the direction of Driehaus Small i.e., Driehaus Small and Wasatch International go up and down completely randomly.

Pair Corralation between Driehaus Small and Wasatch International

Assuming the 90 days horizon Driehaus Small Cap is expected to generate 0.37 times more return on investment than Wasatch International. However, Driehaus Small Cap is 2.74 times less risky than Wasatch International. It trades about 0.04 of its potential returns per unit of risk. Wasatch International Growth is currently generating about -0.16 per unit of risk. If you would invest  2,545  in Driehaus Small Cap on September 14, 2024 and sell it today you would earn a total of  25.00  from holding Driehaus Small Cap or generate 0.98% return on investment over 90 days.

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

Driehaus Small Cap  vs.  Wasatch International Growth

Driehaus Small Cap

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Driehaus Small Cap are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak primary indicators, Driehaus Small showed solid returns over the last few months and may actually be approaching a breakup point.

Wasatch International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wasatch International Growth 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 technical and fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Driehaus Small and Wasatch International

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

The idea behind Driehaus Small Cap and Wasatch International 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.