Correlation Between Regional Bank and Wesmark Government
Can any of the company-specific risk be diversified away by investing in both Regional Bank 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 Regional Bank and Wesmark Government into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Regional Bank Fund and Wesmark Government Bond, you can compare the effects of market volatilities on Regional Bank 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 Regional Bank with a short position of Wesmark Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regional Bank and Wesmark Government.
Diversification Opportunities for Regional Bank and Wesmark Government
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Regional and Wesmark is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Regional Bank Fund 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 Regional Bank 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 Regional Bank Fund 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 Regional Bank i.e., Regional Bank and Wesmark Government go up and down completely randomly.
Pair Corralation between Regional Bank and Wesmark Government
Assuming the 90 days horizon Regional Bank Fund is expected to generate 7.53 times more return on investment than Wesmark Government. However, Regional Bank is 7.53 times more volatile than Wesmark Government Bond. It trades about 0.21 of its potential returns per unit of risk. Wesmark Government Bond is currently generating about 0.08 per unit of risk. If you would invest 2,983 in Regional Bank Fund on August 30, 2024 and sell it today you would earn a total of 411.00 from holding Regional Bank Fund or generate 13.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Regional Bank Fund vs. Wesmark Government Bond
Performance |
| Timeline |
| Regional Bank |
| Wesmark Government Bond |
Regional Bank and Wesmark Government Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Regional Bank and Wesmark Government
The main advantage of trading using opposite Regional Bank and Wesmark Government positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Regional Bank 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.| Regional Bank vs. Regional Bank Fund | Regional Bank vs. Regional Bank Fund | Regional Bank vs. Multimanager Lifestyle Moderate | Regional Bank vs. Multimanager Lifestyle Balanced |
| Wesmark Government vs. Wesmark Growth Fund | Wesmark Government vs. Wesmark Small Pany | Wesmark Government vs. Wesmark Balanced Fund | Wesmark Government 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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