Correlation Between Barings Active and Wells Fargo
Can any of the company-specific risk be diversified away by investing in both Barings Active 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 Barings Active and Wells Fargo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Barings Active Short and Wells Fargo Advantage, you can compare the effects of market volatilities on Barings Active 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 Barings Active with a short position of Wells Fargo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings Active and Wells Fargo.
Diversification Opportunities for Barings Active and Wells Fargo
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Barings and Wells is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Barings Active Short 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 Barings Active 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 Barings Active Short 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 Barings Active i.e., Barings Active and Wells Fargo go up and down completely randomly.
Pair Corralation between Barings Active and Wells Fargo
Assuming the 90 days horizon Barings Active is expected to generate 16.16 times less return on investment than Wells Fargo. But when comparing it to its historical volatility, Barings Active Short is 10.73 times less risky than Wells Fargo. It trades about 0.15 of its potential returns per unit of risk. Wells Fargo Advantage is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 3,898 in Wells Fargo Advantage on August 31, 2024 and sell it today you would earn a total of 275.00 from holding Wells Fargo Advantage or generate 7.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Barings Active Short vs. Wells Fargo Advantage
Performance |
| Timeline |
| Barings Active Short |
| Wells Fargo Advantage |
Barings Active and Wells Fargo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barings Active and Wells Fargo
The main advantage of trading using opposite Barings Active and Wells Fargo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barings Active 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.| Barings Active vs. Blrc Sgy Mnp | Barings Active vs. Ab Impact Municipal | Barings Active vs. Artisan High Income | Barings Active vs. Maryland Tax Free Bond |
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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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