Correlation Between Wasatch Greater and Aggressive Investors

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

By analyzing existing cross correlation between Wasatch Greater China and Aggressive Investors 1, you can compare the effects of market volatilities on Wasatch Greater and Aggressive Investors 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 Greater with a short position of Aggressive Investors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wasatch Greater and Aggressive Investors.

Diversification Opportunities for Wasatch Greater and Aggressive Investors

0.15

Correlation Coefficient

Wasatch Greater  Aggressive Investors

Average diversification

The 3 months correlation between Wasatch and Aggressive is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Wasatch Greater China and Aggressive Investors 1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aggressive Investors and Wasatch Greater 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 Greater China are associated (or correlated) with Aggressive Investors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aggressive Investors has no effect on the direction of Wasatch Greater i.e., Wasatch Greater and Aggressive Investors go up and down completely randomly.

Pair Corralation between Wasatch Greater and Aggressive Investors

Assuming the 90 days horizon Wasatch Greater China is expected to generate 2.56 times more return on investment than Aggressive Investors. However, Wasatch Greater is 2.56 times more volatile than Aggressive Investors 1. It trades about 0.12 of its potential returns per unit of risk. Aggressive Investors 1 is currently generating about 0.2 per unit of risk. If you would invest  405.00  in Wasatch Greater China on September 17, 2024 and sell it today you would earn a total of  70.00  from holding Wasatch Greater China or generate 17.28% return on investment over 90 days.

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

Wasatch Greater China  vs.  Aggressive Investors 1

Wasatch Greater China

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Wasatch Greater China are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Wasatch Greater showed solid returns over the last few months and may actually be approaching a breakup point.

Aggressive Investors

Risk-Adjusted Performance

15 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Aggressive Investors 1 are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Aggressive Investors may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Wasatch Greater and Aggressive Investors

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

The idea behind Wasatch Greater China and Aggressive Investors 1 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.

Check out your portfolio center.

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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.