Correlation Between GM and Wesmark Tactical
Can any of the company-specific risk be diversified away by investing in both GM and Wesmark Tactical 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 GM and Wesmark Tactical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Wesmark Tactical Opportunity, you can compare the effects of market volatilities on GM and Wesmark Tactical 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 GM with a short position of Wesmark Tactical. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Wesmark Tactical.
Diversification Opportunities for GM and Wesmark Tactical
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GM and Wesmark is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Wesmark Tactical Opportunity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wesmark Tactical Opp and GM 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 General Motors are associated (or correlated) with Wesmark Tactical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wesmark Tactical Opp has no effect on the direction of GM i.e., GM and Wesmark Tactical go up and down completely randomly.
Pair Corralation between GM and Wesmark Tactical
Allowing for the 90-day total investment horizon General Motors is expected to under-perform the Wesmark Tactical. In addition to that, GM is 3.91 times more volatile than Wesmark Tactical Opportunity. It trades about -0.02 of its total potential returns per unit of risk. Wesmark Tactical Opportunity is currently generating about -0.01 per unit of volatility. If you would invest 1,189 in Wesmark Tactical Opportunity on December 5, 2024 and sell it today you would lose (1.00) from holding Wesmark Tactical Opportunity or give up 0.08% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
General Motors vs. Wesmark Tactical Opportunity
Performance |
Timeline |
General Motors |
Wesmark Tactical Opp |
GM and Wesmark Tactical Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with GM and Wesmark Tactical
The main advantage of trading using opposite GM and Wesmark Tactical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Wesmark Tactical 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 Tactical will offset losses from the drop in Wesmark Tactical's long position.The idea behind General Motors and Wesmark Tactical Opportunity 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.Wesmark Tactical vs. Wesmark Growth Fund | Wesmark Tactical vs. Wesmark Government Bond | Wesmark Tactical vs. Wesmark Small Pany |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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