Correlation Between American Funds and Wesmark Balanced
Can any of the company-specific risk be diversified away by investing in both American Funds 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 American Funds and Wesmark Balanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds American and Wesmark Balanced Fund, you can compare the effects of market volatilities on American Funds 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 American Funds with a short position of Wesmark Balanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Wesmark Balanced.
Diversification Opportunities for American Funds and Wesmark Balanced
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between American and Wesmark is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding American Funds American and Wesmark Balanced Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wesmark Balanced and American Funds 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 American Funds American 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 American Funds i.e., American Funds and Wesmark Balanced go up and down completely randomly.
Pair Corralation between American Funds and Wesmark Balanced
Assuming the 90 days horizon American Funds is expected to generate 1.26 times less return on investment than Wesmark Balanced. In addition to that, American Funds is 1.05 times more volatile than Wesmark Balanced Fund. It trades about 0.1 of its total potential returns per unit of risk. Wesmark Balanced Fund is currently generating about 0.14 per unit of volatility. If you would invest 1,433 in Wesmark Balanced Fund on August 30, 2024 and sell it today you would earn a total of 22.00 from holding Wesmark Balanced Fund or generate 1.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Funds American vs. Wesmark Balanced Fund
Performance |
| Timeline |
| American Funds American |
| Wesmark Balanced |
American Funds and Wesmark Balanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Wesmark Balanced
The main advantage of trading using opposite American Funds and Wesmark Balanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds 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.| American Funds vs. Income Fund Of | American Funds vs. New World Fund | American Funds vs. American Mutual Fund | American Funds vs. American Mutual Fund |
| Wesmark Balanced vs. Wesmark Growth Fund | Wesmark Balanced vs. Wesmark Government Bond | Wesmark Balanced vs. Wesmark Small Pany | Wesmark Balanced vs. Wesmark West Virginia |
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 Stocks Directory module to find actively traded stocks across global markets.
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