Correlation Between Wesmark West and Plumb Balanced

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

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

Diversification Opportunities for Wesmark West and Plumb Balanced

-0.03

Correlation Coefficient

Wesmark West  Plumb Balanced

Good diversification

The 3 months correlation between Wesmark and Plumb is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Wesmark West Virginia and Plumb Balanced Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plumb Balanced and Wesmark West 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 West Virginia are associated (or correlated) with Plumb Balanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plumb Balanced has no effect on the direction of Wesmark West i.e., Wesmark West and Plumb Balanced go up and down completely randomly.

Pair Corralation between Wesmark West and Plumb Balanced

Assuming the 90 days horizon Wesmark West is expected to generate 6.94 times less return on investment than Plumb Balanced. But when comparing it to its historical volatility, Wesmark West Virginia is 2.71 times less risky than Plumb Balanced. It trades about 0.05 of its potential returns per unit of risk. Plumb Balanced Fund is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  2,729  in Plumb Balanced Fund on September 14, 2024 and sell it today you would earn a total of  1,355  from holding Plumb Balanced Fund or generate 49.65% return on investment over 90 days.

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

Wesmark West Virginia  vs.  Plumb Balanced Fund

Wesmark West Virginia

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Wesmark West Virginia are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong primary indicators, Wesmark West is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Plumb Balanced

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Plumb Balanced Fund are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental drivers, Plumb Balanced is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Wesmark West and Plumb Balanced

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

The idea behind Wesmark West Virginia and Plumb Balanced 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.