Correlation Between Wasatch Small and Nt International

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

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

Diversification Opportunities for Wasatch Small and Nt International

0.23

Correlation Coefficient

Wasatch Small  Nt International

Modest diversification

The 3 months correlation between Wasatch and ANTMX is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Wasatch Small Cap and Nt International Small Mid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nt International Small and Wasatch Small 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 Small Cap are associated (or correlated) with Nt International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nt International Small has no effect on the direction of Wasatch Small i.e., Wasatch Small and Nt International go up and down completely randomly.

Pair Corralation between Wasatch Small and Nt International

Assuming the 90 days horizon Wasatch Small Cap is expected to under-perform the Nt International. In addition to that, Wasatch Small is 2.35 times more volatile than Nt International Small Mid. It trades about -0.11 of its total potential returns per unit of risk. Nt International Small Mid is currently generating about -0.21 per unit of volatility. If you would invest  1,091  in Nt International Small Mid on September 21, 2024 and sell it today you would lose (134.00) from holding Nt International Small Mid or give up 12.28% of portfolio value over 90 days.

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

Wasatch Small Cap  vs.  Nt International Small Mid

Wasatch Small Cap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wasatch Small Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Nt International Small

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nt International Small Mid has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's primary indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Wasatch Small and Nt International

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

The idea behind Wasatch Small Cap and Nt International Small Mid 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.