Correlation Between Wesmark Small and Wesmark Government

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

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

Diversification Opportunities for Wesmark Small and Wesmark Government

0.06

Correlation Coefficient

Wesmark Small  Wesmark Government

Significant diversification

The 3 months correlation between Wesmark and Wesmark is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Wesmark Small Pany and Wesmark Government Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wesmark Government Bond and Wesmark Small 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 Small Pany are associated (or correlated) with Wesmark Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wesmark Government Bond has no effect on the direction of Wesmark Small i.e., Wesmark Small and Wesmark Government go up and down completely randomly.

Pair Corralation between Wesmark Small and Wesmark Government

Assuming the 90 days horizon Wesmark Small Pany is expected to under-perform the Wesmark Government. In addition to that, Wesmark Small is 4.53 times more volatile than Wesmark Government Bond. It trades about -0.17 of its total potential returns per unit of risk. Wesmark Government Bond is currently generating about 0.07 per unit of volatility. If you would invest  785.00  in Wesmark Government Bond on December 4, 2024 and sell it today you would earn a total of  10.00  from holding Wesmark Government Bond or generate 1.27% return on investment over 90 days.

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

Wesmark Small Pany  vs.  Wesmark Government Bond

Wesmark Small Pany

Risk-Adjusted Performance

Very Weak

Over the last 90 days Wesmark Small Pany has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Wesmark Government Bond

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Wesmark Government Bond are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Wesmark Government 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 Small and Wesmark Government

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

The idea behind Wesmark Small Pany and Wesmark Government Bond 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.