Correlation Between STELLA-JONES INC and Wells Fargo
Can any of the company-specific risk be diversified away by investing in both STELLA-JONES INC and Wells Fargo 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 STELLA-JONES INC and Wells Fargo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STELLA JONES INC and West Fraser Timber, you can compare the effects of market volatilities on STELLA-JONES INC and Wells Fargo 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 STELLA-JONES INC with a short position of Wells Fargo. Check out your portfolio center. Please also check ongoing floating volatility patterns of STELLA-JONES INC and Wells Fargo.
Diversification Opportunities for STELLA-JONES INC and Wells Fargo
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between STELLA-JONES and Wells is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding STELLA JONES INC and West Fraser Timber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on West Fraser Timber and STELLA-JONES INC 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 STELLA JONES INC are associated (or correlated) with Wells Fargo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of West Fraser Timber has no effect on the direction of STELLA-JONES INC i.e., STELLA-JONES INC and Wells Fargo go up and down completely randomly.
Pair Corralation between STELLA-JONES INC and Wells Fargo
Assuming the 90 days horizon STELLA JONES INC is expected to under-perform the Wells Fargo. In addition to that, STELLA-JONES INC is 1.36 times more volatile than West Fraser Timber. It trades about 0.0 of its total potential returns per unit of risk. West Fraser Timber is currently generating about 0.07 per unit of volatility. If you would invest 6,819 in West Fraser Timber on September 4, 2024 and sell it today you would earn a total of 2,111 from holding West Fraser Timber or generate 30.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
STELLA JONES INC vs. West Fraser Timber
Performance |
| Timeline |
| STELLA JONES INC |
| West Fraser Timber |
STELLA-JONES INC and Wells Fargo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STELLA-JONES INC and Wells Fargo
The main advantage of trading using opposite STELLA-JONES INC and Wells Fargo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STELLA-JONES INC position performs unexpectedly, Wells Fargo 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 Wells Fargo will offset losses from the drop in Wells Fargo's long position.| STELLA-JONES INC vs. CVS Health | STELLA-JONES INC vs. Bausch Health Companies | STELLA-JONES INC vs. Clearside Biomedical | STELLA-JONES INC vs. Ramsay Health Care |
| Wells Fargo vs. Superior Plus Corp | Wells Fargo vs. NMI Holdings | Wells Fargo vs. Origin Agritech | Wells Fargo vs. SIVERS SEMICONDUCTORS AB |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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