Correlation Between Multimedia Portfolio and Wasatch Global

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

By analyzing existing cross correlation between Multimedia Portfolio Multimedia and Wasatch Global Select, you can compare the effects of market volatilities on Multimedia Portfolio and Wasatch Global 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 Multimedia Portfolio with a short position of Wasatch Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Multimedia Portfolio and Wasatch Global.

Diversification Opportunities for Multimedia Portfolio and Wasatch Global

0.74

Correlation Coefficient

Multimedia Portfolio  Wasatch Global

Poor diversification

The 3 months correlation between Multimedia and Wasatch is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Multimedia Portfolio Multimedi and Wasatch Global Select in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wasatch Global Select and Multimedia Portfolio 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 Multimedia Portfolio Multimedia are associated (or correlated) with Wasatch Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wasatch Global Select has no effect on the direction of Multimedia Portfolio i.e., Multimedia Portfolio and Wasatch Global go up and down completely randomly.

Pair Corralation between Multimedia Portfolio and Wasatch Global

Assuming the 90 days horizon Multimedia Portfolio Multimedia is expected to generate 1.11 times more return on investment than Wasatch Global. However, Multimedia Portfolio is 1.11 times more volatile than Wasatch Global Select. It trades about 0.24 of its potential returns per unit of risk. Wasatch Global Select is currently generating about 0.14 per unit of risk. If you would invest  9,820  in Multimedia Portfolio Multimedia on September 4, 2024 and sell it today you would earn a total of  1,397  from holding Multimedia Portfolio Multimedia or generate 14.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Multimedia Portfolio Multimedi  vs.  Wasatch Global Select

Multimedia Portfolio

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Multimedia Portfolio Multimedia are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Multimedia Portfolio showed solid returns over the last few months and may actually be approaching a breakup point.

Wasatch Global Select

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Wasatch Global Select are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Wasatch Global may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Multimedia Portfolio and Wasatch Global

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

The idea behind Multimedia Portfolio Multimedia and Wasatch Global Select 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.