Correlation Between Redwood Systematic and Wesmark Tactical
Can any of the company-specific risk be diversified away by investing in both Redwood Systematic and Wesmark Tactical 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 Redwood Systematic and Wesmark Tactical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Redwood Systematic Macro and Wesmark Tactical Opportunity, you can compare the effects of market volatilities on Redwood Systematic and Wesmark Tactical 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 Redwood Systematic with a short position of Wesmark Tactical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Redwood Systematic and Wesmark Tactical.
Diversification Opportunities for Redwood Systematic and Wesmark Tactical
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Redwood and Wesmark is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Redwood Systematic Macro and Wesmark Tactical Opportunity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wesmark Tactical Opp and Redwood Systematic 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 Redwood Systematic Macro are associated (or correlated) with Wesmark Tactical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wesmark Tactical Opp has no effect on the direction of Redwood Systematic i.e., Redwood Systematic and Wesmark Tactical go up and down completely randomly.
Pair Corralation between Redwood Systematic and Wesmark Tactical
Assuming the 90 days horizon Redwood Systematic Macro is expected to generate 2.07 times more return on investment than Wesmark Tactical. However, Redwood Systematic is 2.07 times more volatile than Wesmark Tactical Opportunity. It trades about 0.25 of its potential returns per unit of risk. Wesmark Tactical Opportunity is currently generating about 0.18 per unit of risk. If you would invest 1,884 in Redwood Systematic Macro on August 30, 2024 and sell it today you would earn a total of 94.00 from holding Redwood Systematic Macro or generate 4.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Redwood Systematic Macro vs. Wesmark Tactical Opportunity
Performance |
| Timeline |
| Redwood Systematic Macro |
| Wesmark Tactical Opp |
Redwood Systematic and Wesmark Tactical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Redwood Systematic and Wesmark Tactical
The main advantage of trading using opposite Redwood Systematic and Wesmark Tactical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Redwood Systematic position performs unexpectedly, Wesmark Tactical 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 Tactical will offset losses from the drop in Wesmark Tactical's long position.| Redwood Systematic vs. Heartland Value Plus | Redwood Systematic vs. Palm Valley Capital | Redwood Systematic vs. Ultrasmall Cap Profund Ultrasmall Cap | Redwood Systematic vs. Victory Rs Partners |
| Wesmark Tactical vs. Wesmark Growth Fund | Wesmark Tactical vs. Wesmark Government Bond | Wesmark Tactical vs. Wesmark Small Pany |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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