Correlation Between Barings Emerging and Wells Fargo
Can any of the company-specific risk be diversified away by investing in both Barings Emerging 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 Emerging 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 Emerging Markets and Wells Fargo Small, you can compare the effects of market volatilities on Barings Emerging 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 Emerging with a short position of Wells Fargo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings Emerging and Wells Fargo.
Diversification Opportunities for Barings Emerging and Wells Fargo
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Barings and Wells is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Barings Emerging Markets and Wells Fargo Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wells Fargo Small and Barings Emerging 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 Emerging Markets 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 Small has no effect on the direction of Barings Emerging i.e., Barings Emerging and Wells Fargo go up and down completely randomly.
Pair Corralation between Barings Emerging and Wells Fargo
Assuming the 90 days horizon Barings Emerging Markets is expected to generate 0.28 times more return on investment than Wells Fargo. However, Barings Emerging Markets is 3.57 times less risky than Wells Fargo. It trades about -0.08 of its potential returns per unit of risk. Wells Fargo Small is currently generating about -0.18 per unit of risk. If you would invest 761.00 in Barings Emerging Markets on September 12, 2024 and sell it today you would lose (3.00) from holding Barings Emerging Markets or give up 0.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Barings Emerging Markets vs. Wells Fargo Small
Performance |
| Timeline |
| Barings Emerging Markets |
| Wells Fargo Small |
Barings Emerging and Wells Fargo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barings Emerging and Wells Fargo
The main advantage of trading using opposite Barings Emerging and Wells Fargo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barings Emerging 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 Emerging vs. Fidelity New Markets | Barings Emerging vs. Fidelity New Markets | Barings Emerging vs. Fidelity New Markets | Barings Emerging vs. SCOR PK |
| Wells Fargo vs. Barings Emerging Markets | Wells Fargo vs. Investec Emerging Markets | Wells Fargo vs. Kinetics Market Opportunities | Wells Fargo vs. Shelton Emerging Markets |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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