Correlation Between Federated International and Wesmark Small
Can any of the company-specific risk be diversified away by investing in both Federated International and Wesmark Small 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 Federated International and Wesmark Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated International Leaders and Wesmark Small Pany, you can compare the effects of market volatilities on Federated International and Wesmark Small 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 Federated International with a short position of Wesmark Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated International and Wesmark Small.
Diversification Opportunities for Federated International and Wesmark Small
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Federated and Wesmark is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Federated International Leader and Wesmark Small Pany in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wesmark Small Pany and Federated International 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 Federated International Leaders are associated (or correlated) with Wesmark Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wesmark Small Pany has no effect on the direction of Federated International i.e., Federated International and Wesmark Small go up and down completely randomly.
Pair Corralation between Federated International and Wesmark Small
Assuming the 90 days horizon Federated International is expected to generate 2.51 times less return on investment than Wesmark Small. But when comparing it to its historical volatility, Federated International Leaders is 1.41 times less risky than Wesmark Small. It trades about 0.03 of its potential returns per unit of risk. Wesmark Small Pany is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,268 in Wesmark Small Pany on August 27, 2024 and sell it today you would earn a total of 442.00 from holding Wesmark Small Pany or generate 34.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated International Leader vs. Wesmark Small Pany
Performance |
| Timeline |
| Federated International |
| Wesmark Small Pany |
Federated International and Wesmark Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated International and Wesmark Small
The main advantage of trading using opposite Federated International and Wesmark Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated International position performs unexpectedly, Wesmark Small 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 Small will offset losses from the drop in Wesmark Small's long position.The idea behind Federated International Leaders and Wesmark Small Pany 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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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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