Correlation Between Wesmark Balanced and Wesmark Small

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

By analyzing existing cross correlation between Wesmark Balanced Fund and Wesmark Small Pany, you can compare the effects of market volatilities on Wesmark Balanced and Wesmark Small 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 Wesmark Balanced with a short position of Wesmark Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wesmark Balanced and Wesmark Small.

Diversification Opportunities for Wesmark Balanced and Wesmark Small

0.48

Correlation Coefficient

Wesmark Balanced  Wesmark Small

Very weak diversification

The 3 months correlation between Wesmark and Wesmark is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Wesmark Balanced Fund and Wesmark Small Pany in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wesmark Small Pany and Wesmark Balanced 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 Wesmark Balanced Fund are associated (or correlated) with Wesmark Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wesmark Small Pany has no effect on the direction of Wesmark Balanced i.e., Wesmark Balanced and Wesmark Small go up and down completely randomly.

Pair Corralation between Wesmark Balanced and Wesmark Small

Assuming the 90 days horizon Wesmark Balanced is expected to generate 15.18 times less return on investment than Wesmark Small. But when comparing it to its historical volatility, Wesmark Balanced Fund is 3.11 times less risky than Wesmark Small. It trades about 0.04 of its potential returns per unit of risk. Wesmark Small Pany is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  1,459  in Wesmark Small Pany on September 14, 2024 and sell it today you would earn a total of  238.00  from holding Wesmark Small Pany or generate 16.31% return on investment over 90 days.

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

Wesmark Balanced Fund  vs.  Wesmark Small Pany

Wesmark Balanced

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Wesmark Balanced Fund are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong essential indicators, Wesmark Balanced is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Wesmark Small Pany

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Wesmark Small Pany are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Wesmark Small showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Wesmark Balanced and Wesmark Small

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

The idea behind Wesmark Balanced Fund and Wesmark Small Pany 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.