Correlation Between Wasatch E and Wasatch Hoisington

Can any of the company-specific risk be diversified away by investing in both Wasatch E 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 E 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 E Growth and Wasatch Hoisington Treasury Fund, you can compare the effects of market volatilities on Wasatch E 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 E with a short position of Wasatch Hoisington. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wasatch E and Wasatch Hoisington.

Diversification Opportunities for Wasatch E and Wasatch Hoisington

-0.63

Correlation Coefficient

Wasatch E  Wasatch Hoisington

Excellent diversification

The 3 months correlation between Wasatch and Wasatch is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Wasatch E Growth 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 E 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 E Growth 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 E i.e., Wasatch E and Wasatch Hoisington go up and down completely randomly.

Pair Corralation between Wasatch E and Wasatch Hoisington

Assuming the 90 days horizon Wasatch E Growth is expected to generate 0.97 times more return on investment than Wasatch Hoisington. However, Wasatch E Growth is 1.04 times less risky than Wasatch Hoisington. It trades about 0.18 of its potential returns per unit of risk. Wasatch Hoisington Treasury Fund is currently generating about -0.1 per unit of risk. If you would invest  9,405  in Wasatch E Growth on September 12, 2024 and sell it today you would earn a total of  1,179  from holding Wasatch E Growth or generate 12.54% return on investment over 90 days.

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

Wasatch E Growth  vs.  Wasatch Hoisington Treasury Fu

Wasatch E Growth

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Wasatch E Growth are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Wasatch E may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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 E and Wasatch Hoisington

The main advantage of trading using opposite Wasatch E and Wasatch Hoisington positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wasatch E 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 E Growth 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.