Correlation Between Wesmark West and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Wesmark West and Dow Jones 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 West and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wesmark West Virginia and Dow Jones Industrial, you can compare the effects of market volatilities on Wesmark West and Dow Jones 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 West with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wesmark West and Dow Jones.
Diversification Opportunities for Wesmark West and Dow Jones
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Wesmark and Dow is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Wesmark West Virginia and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and Wesmark West 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 West Virginia are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Wesmark West i.e., Wesmark West and Dow Jones go up and down completely randomly.
Pair Corralation between Wesmark West and Dow Jones
Assuming the 90 days horizon Wesmark West is expected to generate 17.23 times less return on investment than Dow Jones. But when comparing it to its historical volatility, Wesmark West Virginia is 2.71 times less risky than Dow Jones. It trades about 0.01 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 3,304,456 in Dow Jones Industrial on October 10, 2024 and sell it today you would earn a total of 948,380 from holding Dow Jones Industrial or generate 28.7% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 99.8% |
Values | Daily Returns |
Wesmark West Virginia vs. Dow Jones Industrial
Performance |
Timeline |
Wesmark West and Dow Jones Volatility Contrast
Predicted Return Density |
Returns |
Wesmark West Virginia
Pair trading matchups for Wesmark West
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Wesmark West and Dow Jones
The main advantage of trading using opposite Wesmark West and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wesmark West position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.Wesmark West vs. Wesmark Government Bond | Wesmark West vs. Wesmark Growth Fund | Wesmark West vs. Wesmark Balanced Fund | Wesmark West vs. Wesmark Small Pany |
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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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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