Correlation Between Associated Capital and Wells Fargo
Can any of the company-specific risk be diversified away by investing in both Associated Capital 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 Associated Capital and Wells Fargo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Associated Capital Group and Wells Fargo Co, you can compare the effects of market volatilities on Associated Capital 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 Associated Capital with a short position of Wells Fargo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Associated Capital and Wells Fargo.
Diversification Opportunities for Associated Capital and Wells Fargo
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Associated and Wells is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Associated Capital Group and Wells Fargo Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wells Fargo and Associated Capital 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 Associated Capital Group 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 Wells Fargo has no effect on the direction of Associated Capital i.e., Associated Capital and Wells Fargo go up and down completely randomly.
Pair Corralation between Associated Capital and Wells Fargo
Allowing for the 90-day total investment horizon Associated Capital Group is expected to generate 8.7 times more return on investment than Wells Fargo. However, Associated Capital is 8.7 times more volatile than Wells Fargo Co. It trades about 0.07 of its potential returns per unit of risk. Wells Fargo Co is currently generating about 0.21 per unit of risk. If you would invest 3,626 in Associated Capital Group on December 1, 2024 and sell it today you would earn a total of 100.00 from holding Associated Capital Group or generate 2.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Associated Capital Group vs. Wells Fargo Co
Performance |
| Timeline |
| Associated Capital |
| Wells Fargo |
Associated Capital and Wells Fargo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Associated Capital and Wells Fargo
The main advantage of trading using opposite Associated Capital and Wells Fargo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Associated Capital 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.| Associated Capital vs. Abrdn Emerging Markets | Associated Capital vs. DWS Municipal Income | Associated Capital vs. Blackrock Muni Intermediate | Associated Capital vs. Blackrock Muniyield |
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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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