Correlation Between Wasatch Large and Wasatch Hoisington

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

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

Diversification Opportunities for Wasatch Large and Wasatch Hoisington

0.64

Correlation Coefficient

Wasatch Large  Wasatch Hoisington

Poor diversification

The 3 months correlation between Wasatch and Wasatch is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Wasatch Large Cap and Wasatch Hoisington Treasury Fu in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wasatch Hoisington and Wasatch Large 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 Large Cap are associated (or correlated) with Wasatch Hoisington. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wasatch Hoisington has no effect on the direction of Wasatch Large i.e., Wasatch Large and Wasatch Hoisington go up and down completely randomly.

Pair Corralation between Wasatch Large and Wasatch Hoisington

Assuming the 90 days horizon Wasatch Large Cap is expected to generate 0.43 times more return on investment than Wasatch Hoisington. However, Wasatch Large Cap is 2.34 times less risky than Wasatch Hoisington. It trades about -0.07 of its potential returns per unit of risk. Wasatch Hoisington Treasury Fund is currently generating about -0.13 per unit of risk. If you would invest  1,006  in Wasatch Large Cap on September 13, 2024 and sell it today you would lose (22.00) from holding Wasatch Large Cap or give up 2.19% of portfolio value over 90 days.

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

Wasatch Large Cap  vs.  Wasatch Hoisington Treasury Fu

Wasatch Large Cap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wasatch Large Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Wasatch Large is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Wasatch Hoisington

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wasatch Hoisington Treasury Fund 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.

Pair Trading with Wasatch Large and Wasatch Hoisington

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

The idea behind Wasatch Large Cap and Wasatch Hoisington Treasury Fund 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.