Correlation Between Wasatch Micro and Nicholas

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

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

Diversification Opportunities for Wasatch Micro and Nicholas

-0.23

Correlation Coefficient

Wasatch Micro  Nicholas

Very good diversification

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

Pair Corralation between Wasatch Micro and Nicholas

Assuming the 90 days horizon Wasatch Micro Cap is expected to generate 1.14 times more return on investment than Nicholas. However, Wasatch Micro is 1.14 times more volatile than Nicholas Ltd Edition. It trades about 0.15 of its potential returns per unit of risk. Nicholas Ltd Edition is currently generating about -0.04 per unit of risk. If you would invest  779.00  in Wasatch Micro Cap on July 29, 2025 and sell it today you would earn a total of  90.00  from holding Wasatch Micro Cap or generate 11.55% return on investment over 90 days.

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

Wasatch Micro Cap  vs.  Nicholas Ltd Edition

Wasatch Micro Cap

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Wasatch Micro Cap are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Wasatch Micro may actually be approaching a critical reversion point that can send shares even higher in November 2025.

Nicholas Edition

Risk-Adjusted Performance

Weakest

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

Pair Trading with Wasatch Micro and Nicholas

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

The idea behind Wasatch Micro Cap and Nicholas Ltd Edition 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.