Correlation Between Wesmark Growth and Heartland Value

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

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

Diversification Opportunities for Wesmark Growth and Heartland Value

0.87

Correlation Coefficient

Wesmark Growth  Heartland Value

Very poor diversification

The 3 months correlation between Wesmark and Heartland is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Wesmark Growth Fund and Heartland Value Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heartland Value and Wesmark Growth 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 Growth Fund are associated (or correlated) with Heartland Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heartland Value has no effect on the direction of Wesmark Growth i.e., Wesmark Growth and Heartland Value go up and down completely randomly.

Pair Corralation between Wesmark Growth and Heartland Value

Assuming the 90 days horizon Wesmark Growth is expected to generate 1.42 times less return on investment than Heartland Value. But when comparing it to its historical volatility, Wesmark Growth Fund is 1.57 times less risky than Heartland Value. It trades about 0.2 of its potential returns per unit of risk. Heartland Value Fund is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  5,028  in Heartland Value Fund on September 12, 2024 and sell it today you would earn a total of  638.00  from holding Heartland Value Fund or generate 12.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.44%
Values	Daily Returns

Wesmark Growth Fund  vs.  Heartland Value Fund

Wesmark Growth

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Wesmark Growth Fund are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Wesmark Growth may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Heartland Value

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Heartland Value Fund are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Heartland Value may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Wesmark Growth and Heartland Value

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

The idea behind Wesmark Growth Fund and Heartland Value 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.

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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..