Correlation Between Wesmark Balanced and Wesmark West

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

Diversification Opportunities for Wesmark Balanced and Wesmark West

0.62

Correlation Coefficient

Wesmark Balanced  Wesmark West

Poor diversification

The 3 months correlation between Wesmark and Wesmark is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Wesmark Balanced Fund and Wesmark West Virginia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wesmark West Virginia 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 West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wesmark West Virginia has no effect on the direction of Wesmark Balanced i.e., Wesmark Balanced and Wesmark West go up and down completely randomly.

Pair Corralation between Wesmark Balanced and Wesmark West

Assuming the 90 days horizon Wesmark Balanced Fund is expected to under-perform the Wesmark West. In addition to that, Wesmark Balanced is 1.79 times more volatile than Wesmark West Virginia. It trades about -0.03 of its total potential returns per unit of risk. Wesmark West Virginia is currently generating about -0.04 per unit of volatility. If you would invest  962.00  in Wesmark West Virginia on December 29, 2024 and sell it today you would lose (7.00) from holding Wesmark West Virginia or give up 0.73% of portfolio value over 90 days.

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

Wesmark Balanced Fund  vs.  Wesmark West Virginia

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 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.

Wesmark West Virginia

Risk-Adjusted Performance

Very Weak

Over the last 90 days Wesmark West Virginia has generated negative risk-adjusted returns adding no value to fund investors. 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.

Pair Trading with Wesmark Balanced and Wesmark West

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

The idea behind Wesmark Balanced Fund and Wesmark West Virginia 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.