Correlation Between New Economy and Wesmark Balanced
Can any of the company-specific risk be diversified away by investing in both New Economy 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 New Economy and Wesmark Balanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Economy Fund and Wesmark Balanced Fund, you can compare the effects of market volatilities on New Economy 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 New Economy with a short position of Wesmark Balanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Economy and Wesmark Balanced.
Diversification Opportunities for New Economy and Wesmark Balanced
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between New and Wesmark is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding New Economy Fund and Wesmark Balanced Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wesmark Balanced and New Economy 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 New Economy Fund 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 New Economy i.e., New Economy and Wesmark Balanced go up and down completely randomly.
Pair Corralation between New Economy and Wesmark Balanced
Assuming the 90 days horizon New Economy is expected to generate 1.78 times less return on investment than Wesmark Balanced. In addition to that, New Economy is 1.92 times more volatile than Wesmark Balanced Fund. It trades about 0.04 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 | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
New Economy Fund vs. Wesmark Balanced Fund
Performance |
| Timeline |
| New Economy Fund |
| Wesmark Balanced |
New Economy and Wesmark Balanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Economy and Wesmark Balanced
The main advantage of trading using opposite New Economy and Wesmark Balanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Economy 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.| New Economy vs. Allianzgi Health Sciences | New Economy vs. Live Oak Health | New Economy vs. Baillie Gifford Health | New Economy vs. Baron Health Care |
| 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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