Correlation Between Wesmark Government and Wesmark Balanced

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

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

Diversification Opportunities for Wesmark Government and Wesmark Balanced

-0.05

Correlation Coefficient

Wesmark Government  Wesmark Balanced

Good diversification

The 3 months correlation between Wesmark and Wesmark is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Wesmark Government Bond and Wesmark Balanced Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wesmark Balanced and Wesmark Government 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 Government Bond are associated (or correlated) with Wesmark Balanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wesmark Balanced has no effect on the direction of Wesmark Government i.e., Wesmark Government and Wesmark Balanced go up and down completely randomly.

Pair Corralation between Wesmark Government and Wesmark Balanced

Assuming the 90 days horizon Wesmark Government Bond is expected to under-perform the Wesmark Balanced. But the mutual fund apears to be less risky and, when comparing its historical volatility, Wesmark Government Bond is 1.24 times less risky than Wesmark Balanced. The mutual fund trades about -0.16 of its potential returns per unit of risk. The Wesmark Balanced Fund is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,426  in Wesmark Balanced Fund on September 14, 2024 and sell it today you would earn a total of  14.00  from holding Wesmark Balanced Fund or generate 0.98% return on investment over 90 days.

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

Wesmark Government Bond  vs.  Wesmark Balanced Fund

Wesmark Government Bond

Risk-Adjusted Performance

0 of 100

Very Weak

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

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.

Pair Trading with Wesmark Government and Wesmark Balanced

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

The idea behind Wesmark Government Bond and Wesmark 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.

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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.