Correlation Between Lebenthal Lisanti and Wells Fargo
Can any of the company-specific risk be diversified away by investing in both Lebenthal Lisanti 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 Lebenthal Lisanti and Wells Fargo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lebenthal Lisanti Small and Wells Fargo Large, you can compare the effects of market volatilities on Lebenthal Lisanti 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 Lebenthal Lisanti with a short position of Wells Fargo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lebenthal Lisanti and Wells Fargo.
Diversification Opportunities for Lebenthal Lisanti and Wells Fargo
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Lebenthal and Wells is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Lebenthal Lisanti Small and Wells Fargo Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wells Fargo Large and Lebenthal Lisanti 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 Lebenthal Lisanti Small 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 Large has no effect on the direction of Lebenthal Lisanti i.e., Lebenthal Lisanti and Wells Fargo go up and down completely randomly.
Pair Corralation between Lebenthal Lisanti and Wells Fargo
Assuming the 90 days horizon Lebenthal Lisanti Small is expected to generate 1.02 times more return on investment than Wells Fargo. However, Lebenthal Lisanti is 1.02 times more volatile than Wells Fargo Large. It trades about 0.09 of its potential returns per unit of risk. Wells Fargo Large is currently generating about 0.05 per unit of risk. If you would invest 1,653 in Lebenthal Lisanti Small on September 14, 2024 and sell it today you would earn a total of 586.00 from holding Lebenthal Lisanti Small or generate 35.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lebenthal Lisanti Small vs. Wells Fargo Large
Performance |
| Timeline |
| Lebenthal Lisanti Small |
| Wells Fargo Large |
Lebenthal Lisanti and Wells Fargo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lebenthal Lisanti and Wells Fargo
The main advantage of trading using opposite Lebenthal Lisanti and Wells Fargo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lebenthal Lisanti 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.| Lebenthal Lisanti vs. Lord Abbett Growth | Lebenthal Lisanti vs. Queens Road Small | Lebenthal Lisanti vs. Eaton Vance Large Cap |
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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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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