Correlation Between Nasdaq-100(r) and Wesmark Tactical
Can any of the company-specific risk be diversified away by investing in both Nasdaq-100(r) 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 Nasdaq-100(r) and Wesmark Tactical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nasdaq 100 2x Strategy and Wesmark Tactical Opportunity, you can compare the effects of market volatilities on Nasdaq-100(r) 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 Nasdaq-100(r) with a short position of Wesmark Tactical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq-100(r) and Wesmark Tactical.
Diversification Opportunities for Nasdaq-100(r) and Wesmark Tactical
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Nasdaq-100(r) and Wesmark is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq 100 2x Strategy 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 Nasdaq-100(r) 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 Nasdaq 100 2x Strategy 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 Nasdaq-100(r) i.e., Nasdaq-100(r) and Wesmark Tactical go up and down completely randomly.
Pair Corralation between Nasdaq-100(r) and Wesmark Tactical
Assuming the 90 days horizon Nasdaq-100(r) is expected to generate 1.02 times less return on investment than Wesmark Tactical. In addition to that, Nasdaq-100(r) is 5.29 times more volatile than Wesmark Tactical Opportunity. It trades about 0.03 of its total potential returns per unit of risk. Wesmark Tactical Opportunity is currently generating about 0.18 per unit of volatility. If you would invest 1,183 in Wesmark Tactical Opportunity on August 30, 2024 and sell it today you would earn a total of 21.00 from holding Wesmark Tactical Opportunity or generate 1.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nasdaq 100 2x Strategy vs. Wesmark Tactical Opportunity
Performance |
| Timeline |
| Nasdaq 100 2x |
| Wesmark Tactical Opp |
Nasdaq-100(r) and Wesmark Tactical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nasdaq-100(r) and Wesmark Tactical
The main advantage of trading using opposite Nasdaq-100(r) and Wesmark Tactical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq-100(r) 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.| Nasdaq-100(r) vs. Sp 500 2x | Nasdaq-100(r) vs. Inverse Nasdaq 100 2x | Nasdaq-100(r) vs. Inverse Sp 500 | Nasdaq-100(r) vs. Ultra Nasdaq 100 Profunds |
| 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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