Correlation Between Wesmark Small and Wesmark Balanced

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

Diversification Opportunities for Wesmark Small and Wesmark Balanced

0.88

Correlation Coefficient

Wesmark Small  Wesmark Balanced

Very poor diversification

The 3 months correlation between Wesmark and Wesmark is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Wesmark Small Pany 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 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 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 Small i.e., Wesmark Small and Wesmark Balanced go up and down completely randomly.

Pair Corralation between Wesmark Small and Wesmark Balanced

Assuming the 90 days horizon Wesmark Small Pany is expected to under-perform the Wesmark Balanced. In addition to that, Wesmark Small is 3.06 times more volatile than Wesmark Balanced Fund. It trades about -0.26 of its total potential returns per unit of risk. Wesmark Balanced Fund is currently generating about -0.03 per unit of volatility. If you would invest  1,327  in Wesmark Balanced Fund on December 4, 2024 and sell it today you would lose (4.00) from holding Wesmark Balanced Fund or give up 0.3% of portfolio value over 90 days.

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

Wesmark Small Pany  vs.  Wesmark Balanced Fund

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 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 latest weak performance, the Fund's essential indicators 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 Small and Wesmark Balanced

The main advantage of trading using opposite Wesmark Small and Wesmark Balanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wesmark Small 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 Small Pany 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.