Correlation Between Wasatch International and Wasatch Select

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

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

Diversification Opportunities for Wasatch International and Wasatch Select

-0.46

Correlation Coefficient

Wasatch International  Wasatch Select

Very good diversification

The 3 months correlation between Wasatch and Wasatch is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Wasatch International Growth and Wasatch Select Investor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wasatch Select Investor and Wasatch International 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 International Growth are associated (or correlated) with Wasatch Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wasatch Select Investor has no effect on the direction of Wasatch International i.e., Wasatch International and Wasatch Select go up and down completely randomly.

Pair Corralation between Wasatch International and Wasatch Select

Assuming the 90 days horizon Wasatch International Growth is expected to under-perform the Wasatch Select. But the mutual fund apears to be less risky and, when comparing its historical volatility, Wasatch International Growth is 1.15 times less risky than Wasatch Select. The mutual fund trades about -0.02 of its potential returns per unit of risk. The Wasatch Select Investor is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  1,493  in Wasatch Select Investor on September 13, 2024 and sell it today you would earn a total of  140.00  from holding Wasatch Select Investor or generate 9.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Wasatch International Growth  vs.  Wasatch Select Investor

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 fairly strong technical and fundamental indicators, Wasatch International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Wasatch Select Investor

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Wasatch Select Investor are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Wasatch Select may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Wasatch International and Wasatch Select

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

The idea behind Wasatch International Growth and Wasatch Select Investor 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.