Correlation Between Swan Defined and Wesmark Government

Can any of the company-specific risk be diversified away by investing in both Swan Defined and Wesmark Government 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 Swan Defined and Wesmark Government into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Swan Defined Risk and Wesmark Government Bond, you can compare the effects of market volatilities on Swan Defined and Wesmark Government 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 Swan Defined with a short position of Wesmark Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Swan Defined and Wesmark Government.

Diversification Opportunities for Swan Defined and Wesmark Government

0.48

Correlation Coefficient

Swan Defined  Wesmark Government

Very weak diversification

The 3 months correlation between Swan and Wesmark is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Swan Defined Risk and Wesmark Government Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wesmark Government Bond and Swan Defined 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 Swan Defined Risk are associated (or correlated) with Wesmark Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wesmark Government Bond has no effect on the direction of Swan Defined i.e., Swan Defined and Wesmark Government go up and down completely randomly.

Pair Corralation between Swan Defined and Wesmark Government

Assuming the 90 days horizon Swan Defined Risk is expected to generate 2.47 times more return on investment than Wesmark Government. However, Swan Defined is 2.47 times more volatile than Wesmark Government Bond. It trades about 0.13 of its potential returns per unit of risk. Wesmark Government Bond is currently generating about 0.01 per unit of risk. If you would invest  1,499  in Swan Defined Risk on September 11, 2025 and sell it today you would earn a total of  67.00  from holding Swan Defined Risk or generate 4.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Swan Defined Risk  vs.  Wesmark Government Bond

Swan Defined Risk

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Swan Defined Risk are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Swan Defined is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Wesmark Government Bond

Risk-Adjusted Performance

Weak

Over the last 90 days Wesmark Government Bond has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Wesmark Government is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Swan Defined and Wesmark Government

The main advantage of trading using opposite Swan Defined and Wesmark Government positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Swan Defined position performs unexpectedly, Wesmark Government 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 Government will offset losses from the drop in Wesmark Government's long position.

The idea behind Swan Defined Risk and Wesmark Government Bond pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Transaction History module to view history of all your transactions and understand their impact on performance.