Correlation Between Wesmark Growth and Plumb Balanced

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

Diversification Opportunities for Wesmark Growth and Plumb Balanced

0.62

Correlation Coefficient

Wesmark Growth  Plumb Balanced

Poor diversification

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

Pair Corralation between Wesmark Growth and Plumb Balanced

Assuming the 90 days horizon Wesmark Growth Fund is expected to generate 0.42 times more return on investment than Plumb Balanced. However, Wesmark Growth Fund is 2.36 times less risky than Plumb Balanced. It trades about 0.19 of its potential returns per unit of risk. Plumb Balanced Fund is currently generating about -0.07 per unit of risk. If you would invest  2,476  in Wesmark Growth Fund on September 16, 2024 and sell it today you would earn a total of  222.00  from holding Wesmark Growth Fund or generate 8.97% return on investment over 90 days.

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

Wesmark Growth Fund  vs.  Plumb Balanced 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.

Plumb Balanced

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Wesmark Growth and Plumb Balanced

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

The idea behind Wesmark Growth Fund and Plumb 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.

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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.