Correlation Between Global Gold and Wells Fargo
Can any of the company-specific risk be diversified away by investing in both Global Gold 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 Global Gold and Wells Fargo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Gold Fund and Wells Fargo Advantage, you can compare the effects of market volatilities on Global Gold 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 Global Gold with a short position of Wells Fargo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Gold and Wells Fargo.
Diversification Opportunities for Global Gold and Wells Fargo
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Global and Wells is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Global Gold Fund and Wells Fargo Advantage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wells Fargo Advantage and Global Gold 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 Global Gold Fund 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 Advantage has no effect on the direction of Global Gold i.e., Global Gold and Wells Fargo go up and down completely randomly.
Pair Corralation between Global Gold and Wells Fargo
Assuming the 90 days horizon Global Gold Fund is expected to generate 0.93 times more return on investment than Wells Fargo. However, Global Gold Fund is 1.07 times less risky than Wells Fargo. It trades about 0.37 of its potential returns per unit of risk. Wells Fargo Advantage is currently generating about 0.29 per unit of risk. If you would invest 1,185 in Global Gold Fund on October 25, 2024 and sell it today you would earn a total of 113.00 from holding Global Gold Fund or generate 9.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 94.74% |
| Values | Daily Returns |
Global Gold Fund vs. Wells Fargo Advantage
Performance |
| Timeline |
| Global Gold Fund |
| Wells Fargo Advantage |
Global Gold and Wells Fargo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Gold and Wells Fargo
The main advantage of trading using opposite Global Gold and Wells Fargo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Gold 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.| Global Gold vs. Ultramid Cap Profund Ultramid Cap | Global Gold vs. Ultrasmall Cap Profund Ultrasmall Cap | Global Gold vs. Lord Abbett Small | Global Gold vs. Heartland Value Plus |
| Wells Fargo vs. Wells Fargo Advantage | Wells Fargo vs. Wells Fargo Advantage | Wells Fargo vs. Franklin Gold Precious | Wells Fargo vs. Precious Metals Ultrasector |
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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