Correlation Between Barings Global and Wells Fargo
Can any of the company-specific risk be diversified away by investing in both Barings Global 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 Global 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 Global Floating and Wells Fargo Ultra, you can compare the effects of market volatilities on Barings Global 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 Global with a short position of Wells Fargo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings Global and Wells Fargo.
Diversification Opportunities for Barings Global and Wells Fargo
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Barings and Wells is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Barings Global Floating and Wells Fargo Ultra in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wells Fargo Ultra and Barings Global 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 Global Floating 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 Ultra has no effect on the direction of Barings Global i.e., Barings Global and Wells Fargo go up and down completely randomly.
Pair Corralation between Barings Global and Wells Fargo
Assuming the 90 days horizon Barings Global Floating is expected to generate 2.67 times more return on investment than Wells Fargo. However, Barings Global is 2.67 times more volatile than Wells Fargo Ultra. It trades about 0.22 of its potential returns per unit of risk. Wells Fargo Ultra is currently generating about 0.23 per unit of risk. If you would invest 762.00 in Barings Global Floating on September 2, 2024 and sell it today you would earn a total of 116.00 from holding Barings Global Floating or generate 15.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Barings Global Floating vs. Wells Fargo Ultra
Performance |
| Timeline |
| Barings Global Floating |
| Wells Fargo Ultra |
Barings Global and Wells Fargo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barings Global and Wells Fargo
The main advantage of trading using opposite Barings Global and Wells Fargo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barings Global 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 Global vs. Barings Active Short | Barings Global vs. Barings Emerging Markets | Barings Global vs. Barings Emerging Markets | Barings Global vs. Barings Active Short |
| Wells Fargo vs. Pimco Funds | Wells Fargo vs. Dws Government Money | Wells Fargo vs. Meeder Funds | Wells Fargo vs. Ashmore 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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