Correlation Between Wesmark Growth and Wesmark Balanced

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

Diversification Opportunities for Wesmark Growth and Wesmark Balanced

0.62

Correlation Coefficient

Wesmark Growth  Wesmark Balanced

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 Growth Fund 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 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 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 Growth i.e., Wesmark Growth and Wesmark Balanced go up and down completely randomly.

Pair Corralation between Wesmark Growth and Wesmark Balanced

Assuming the 90 days horizon Wesmark Growth Fund is expected to under-perform the Wesmark Balanced. In addition to that, Wesmark Growth is 2.19 times more volatile than Wesmark Balanced Fund. It trades about -0.09 of its total potential returns per unit of risk. Wesmark Balanced Fund is currently generating about -0.02 per unit of volatility. If you would invest  1,308  in Wesmark Balanced Fund on December 27, 2024 and sell it today you would lose (7.00) from holding Wesmark Balanced Fund or give up 0.54% of portfolio value over 90 days.

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

Wesmark Growth Fund  vs.  Wesmark Balanced Fund

Wesmark Growth

Risk-Adjusted Performance

Very Weak

Over the last 90 days Wesmark Growth Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Wesmark Growth 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

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.

Pair Trading with Wesmark Growth and Wesmark Balanced

The main advantage of trading using opposite Wesmark Growth and Wesmark Balanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wesmark Growth 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 Growth Fund 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.

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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.