Correlation Between Wesmark Balanced and Wesmark Government

Can any of the company-specific risk be diversified away by investing in both Wesmark Balanced and Wesmark Government 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 Government 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 Government Bond, you can compare the effects of market volatilities on Wesmark Balanced and Wesmark Government 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 Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wesmark Balanced and Wesmark Government.

Diversification Opportunities for Wesmark Balanced and Wesmark Government

0.48

Correlation Coefficient

Wesmark Balanced  Wesmark Government

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 Government Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wesmark Government Bond 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 Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wesmark Government Bond has no effect on the direction of Wesmark Balanced i.e., Wesmark Balanced and Wesmark Government go up and down completely randomly.

Pair Corralation between Wesmark Balanced and Wesmark Government

Assuming the 90 days horizon Wesmark Balanced is expected to generate 3.04 times less return on investment than Wesmark Government. But when comparing it to its historical volatility, Wesmark Balanced Fund is 1.17 times less risky than Wesmark Government. It trades about 0.13 of its potential returns per unit of risk. Wesmark Government Bond is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest  777.00  in Wesmark Government Bond on December 4, 2024 and sell it today you would earn a total of  18.00  from holding Wesmark Government Bond or generate 2.32% 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 Government Bond

Wesmark Balanced

Risk-Adjusted Performance

Very Weak

Over the last 90 days Wesmark Balanced Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Wesmark Government Bond

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Wesmark Government Bond are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. 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.

Pair Trading with Wesmark Balanced and Wesmark Government

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

The idea behind Wesmark Balanced Fund and Wesmark Government Bond 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.