Correlation Between Wesmark Government and Federated International
Can any of the company-specific risk be diversified away by investing in both Wesmark Government and Federated International 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 Wesmark Government and Federated International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wesmark Government Bond and Federated International Leaders, you can compare the effects of market volatilities on Wesmark Government and Federated International 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 Wesmark Government with a short position of Federated International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wesmark Government and Federated International.
Diversification Opportunities for Wesmark Government and Federated International
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Wesmark and Federated is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Wesmark Government Bond and Federated International Leader in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated International and Wesmark Government 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 Wesmark Government Bond are associated (or correlated) with Federated International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated International has no effect on the direction of Wesmark Government i.e., Wesmark Government and Federated International go up and down completely randomly.
Pair Corralation between Wesmark Government and Federated International
Assuming the 90 days horizon Wesmark Government is expected to generate 2.66 times less return on investment than Federated International. But when comparing it to its historical volatility, Wesmark Government Bond is 2.54 times less risky than Federated International. It trades about 0.3 of its potential returns per unit of risk. Federated International Leaders is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 3,711 in Federated International Leaders on November 29, 2024 and sell it today you would earn a total of 206.00 from holding Federated International Leaders or generate 5.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wesmark Government Bond vs. Federated International Leader
Performance |
| Timeline |
| Wesmark Government Bond |
| Federated International |
Wesmark Government and Federated International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wesmark Government and Federated International
The main advantage of trading using opposite Wesmark Government and Federated International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wesmark Government position performs unexpectedly, Federated International 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 Federated International will offset losses from the drop in Federated International's long position.| Wesmark Government vs. Wesmark Growth Fund | Wesmark Government vs. Wesmark Small Pany | Wesmark Government vs. Wesmark Balanced Fund | Wesmark Government vs. Wesmark West Virginia |
| Federated International vs. Jpmorgan High Yield | Federated International vs. Mainstay High Yield | Federated International vs. T Rowe Price | Federated International vs. Pace High Yield |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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