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
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Global and Wells is 0.38. 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 is expected to generate 1.07 times less return on investment than Wells Fargo. In addition to that, Global Gold is 4.13 times more volatile than Wells Fargo Advantage. It trades about 0.02 of its total potential returns per unit of risk. Wells Fargo Advantage is currently generating about 0.09 per unit of volatility. If you would invest 1,014 in Wells Fargo Advantage on August 30, 2024 and sell it today you would earn a total of 173.00 from holding Wells Fargo Advantage or generate 17.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| 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. First Eagle Gold | Global Gold vs. Aquagold International | Global Gold vs. Morningstar Unconstrained Allocation | Global Gold vs. Thrivent High Yield |
| Wells Fargo vs. Ab Small Cap | Wells Fargo vs. Artisan Small Cap | Wells Fargo vs. Small Cap Growth | Wells Fargo vs. Vanguard Strategic Small Cap |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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