Correlation Between Embotelladora Andina and Wells Fargo
Can any of the company-specific risk be diversified away by investing in both Embotelladora Andina 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 Embotelladora Andina and Wells Fargo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Embotelladora Andina SA and Wells Fargo, you can compare the effects of market volatilities on Embotelladora Andina 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 Embotelladora Andina with a short position of Wells Fargo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Embotelladora Andina and Wells Fargo.
Diversification Opportunities for Embotelladora Andina and Wells Fargo
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Embotelladora and Wells is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Embotelladora Andina SA and Wells Fargo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wells Fargo and Embotelladora Andina 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 Embotelladora Andina SA 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 Embotelladora Andina i.e., Embotelladora Andina and Wells Fargo go up and down completely randomly.
Pair Corralation between Embotelladora Andina and Wells Fargo
Assuming the 90 days trading horizon Embotelladora Andina SA is expected to under-perform the Wells Fargo. In addition to that, Embotelladora Andina is 1.34 times more volatile than Wells Fargo. It trades about -0.13 of its total potential returns per unit of risk. Wells Fargo is currently generating about 0.2 per unit of volatility. If you would invest 1,510,000 in Wells Fargo on August 30, 2024 and sell it today you would earn a total of 185,000 from holding Wells Fargo or generate 12.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 76.19% |
| Values | Daily Returns |
Embotelladora Andina SA vs. Wells Fargo
Performance |
| Timeline |
| Embotelladora Andina |
| Wells Fargo |
Embotelladora Andina and Wells Fargo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Embotelladora Andina and Wells Fargo
The main advantage of trading using opposite Embotelladora Andina and Wells Fargo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Embotelladora Andina 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.| Embotelladora Andina vs. Alibaba Group Holding | Embotelladora Andina vs. Apple Inc DRC | Embotelladora Andina vs. Alphabet Inc Class A CEDEAR | Embotelladora Andina vs. Amazon Inc |
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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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