Correlation Between Wesmark Small and Wesmark Growth
Can any of the company-specific risk be diversified away by investing in both Wesmark Small and Wesmark Growth 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 Small and Wesmark Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wesmark Small Pany and Wesmark Growth Fund, you can compare the effects of market volatilities on Wesmark Small and Wesmark Growth 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 Small with a short position of Wesmark Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wesmark Small and Wesmark Growth.
Diversification Opportunities for Wesmark Small and Wesmark Growth
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Wesmark and Wesmark is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Wesmark Small Pany and Wesmark Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wesmark Growth and Wesmark Small 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 Small Pany are associated (or correlated) with Wesmark Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wesmark Growth has no effect on the direction of Wesmark Small i.e., Wesmark Small and Wesmark Growth go up and down completely randomly.
Pair Corralation between Wesmark Small and Wesmark Growth
Assuming the 90 days horizon Wesmark Small Pany is expected to generate 1.93 times more return on investment than Wesmark Growth. However, Wesmark Small is 1.93 times more volatile than Wesmark Growth Fund. It trades about 0.32 of its potential returns per unit of risk. Wesmark Growth Fund is currently generating about 0.13 per unit of risk. If you would invest 1,529 in Wesmark Small Pany on August 30, 2024 and sell it today you would earn a total of 196.00 from holding Wesmark Small Pany or generate 12.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wesmark Small Pany vs. Wesmark Growth Fund
Performance |
| Timeline |
| Wesmark Small Pany |
| Wesmark Growth |
Wesmark Small and Wesmark Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wesmark Small and Wesmark Growth
The main advantage of trading using opposite Wesmark Small and Wesmark Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wesmark Small position performs unexpectedly, Wesmark Growth 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 Growth will offset losses from the drop in Wesmark Growth's long position.| Wesmark Small vs. Wesmark Growth Fund | Wesmark Small vs. Wesmark Government Bond | Wesmark Small vs. Wesmark Balanced Fund | Wesmark Small vs. Wesmark West Virginia |
| Wesmark Growth vs. Wesmark Small Pany | Wesmark Growth vs. Wesmark Government Bond | Wesmark Growth vs. Wesmark Balanced Fund | Wesmark Growth 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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