Correlation Between Utah Medical and WesBanco

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

By analyzing existing cross correlation between Utah Medical Products and WesBanco, you can compare the effects of market volatilities on Utah Medical and WesBanco 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 Utah Medical with a short position of WesBanco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Utah Medical and WesBanco.

Diversification Opportunities for Utah Medical and WesBanco

-0.51

Correlation Coefficient

Utah Medical  WesBanco

Excellent diversification

The 3 months correlation between Utah and WesBanco is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Utah Medical Products and WesBanco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WesBanco and Utah Medical 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 Utah Medical Products are associated (or correlated) with WesBanco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WesBanco has no effect on the direction of Utah Medical i.e., Utah Medical and WesBanco go up and down completely randomly.

Pair Corralation between Utah Medical and WesBanco

Given the investment horizon of 90 days Utah Medical Products is expected to under-perform the WesBanco. In addition to that, Utah Medical is 2.83 times more volatile than WesBanco. It trades about -0.04 of its total potential returns per unit of risk. WesBanco is currently generating about 0.13 per unit of volatility. If you would invest  2,278  in WesBanco on October 9, 2024 and sell it today you would earn a total of  263.00  from holding WesBanco or generate 11.55% return on investment over 90 days.

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

Utah Medical Products  vs.  WesBanco

Utah Medical Products

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Utah Medical Products has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's primary indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

WesBanco

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in WesBanco are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental indicators, WesBanco is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Utah Medical and WesBanco

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

The idea behind Utah Medical Products and WesBanco 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 Stocks Directory module to find actively traded stocks across global markets.