Correlation Between Wesmark Government and Multimanager Lifestyle
Can any of the company-specific risk be diversified away by investing in both Wesmark Government and Multimanager Lifestyle 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 Multimanager Lifestyle 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 Multimanager Lifestyle Growth, you can compare the effects of market volatilities on Wesmark Government and Multimanager Lifestyle 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 Multimanager Lifestyle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wesmark Government and Multimanager Lifestyle.
Diversification Opportunities for Wesmark Government and Multimanager Lifestyle
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Wesmark and MULTIMANAGER is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Wesmark Government Bond and Multimanager Lifestyle Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multimanager Lifestyle 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 Multimanager Lifestyle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multimanager Lifestyle has no effect on the direction of Wesmark Government i.e., Wesmark Government and Multimanager Lifestyle go up and down completely randomly.
Pair Corralation between Wesmark Government and Multimanager Lifestyle
Assuming the 90 days horizon Wesmark Government is expected to generate 3.15 times less return on investment than Multimanager Lifestyle. But when comparing it to its historical volatility, Wesmark Government Bond is 1.56 times less risky than Multimanager Lifestyle. It trades about 0.03 of its potential returns per unit of risk. Multimanager Lifestyle Growth is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,182 in Multimanager Lifestyle Growth on November 9, 2024 and sell it today you would earn a total of 265.00 from holding Multimanager Lifestyle Growth or generate 22.42% 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. Multimanager Lifestyle Growth
Performance |
| Timeline |
| Wesmark Government Bond |
| Multimanager Lifestyle |
Wesmark Government and Multimanager Lifestyle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wesmark Government and Multimanager Lifestyle
The main advantage of trading using opposite Wesmark Government and Multimanager Lifestyle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wesmark Government position performs unexpectedly, Multimanager Lifestyle 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 Multimanager Lifestyle will offset losses from the drop in Multimanager Lifestyle'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 |
| Multimanager Lifestyle vs. Virtus Seix Government | Multimanager Lifestyle vs. Federated Muni And | Multimanager Lifestyle vs. Franklin Adjustable Government | Multimanager Lifestyle vs. Pace Municipal Fixed |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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