Correlation Between Capex SA and Wells Fargo

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Capex SA 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 Capex SA and Wells Fargo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capex SA and Wells Fargo, you can compare the effects of market volatilities on Capex SA 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 Capex SA with a short position of Wells Fargo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capex SA and Wells Fargo.

Diversification Opportunities for Capex SA and Wells Fargo

0.38
  Correlation Coefficient

Weak diversification

The 3 months correlation between Capex and Wells is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Capex SA and Wells Fargo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wells Fargo and Capex SA 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 Capex 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 Capex SA i.e., Capex SA and Wells Fargo go up and down completely randomly.

Pair Corralation between Capex SA and Wells Fargo

Assuming the 90 days trading horizon Capex SA is expected to generate 1.6 times more return on investment than Wells Fargo. However, Capex SA is 1.6 times more volatile than Wells Fargo. It trades about 0.12 of its potential returns per unit of risk. Wells Fargo is currently generating about 0.06 per unit of risk. If you would invest  570,600  in Capex SA on September 1, 2024 and sell it today you would earn a total of  322,400  from holding Capex SA or generate 56.5% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Capex SA  vs.  Wells Fargo

 Performance 
       Timeline  
Capex SA 

Risk-Adjusted Performance

16 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Capex SA are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Capex SA sustained solid returns over the last few months and may actually be approaching a breakup point.
Wells Fargo 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Wells Fargo are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, Wells Fargo sustained solid returns over the last few months and may actually be approaching a breakup point.

Capex SA and Wells Fargo Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Capex SA and Wells Fargo

The main advantage of trading using opposite Capex SA and Wells Fargo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capex SA 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.
The idea behind Capex SA and Wells Fargo pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.

Other Complementary Tools

Companies Directory
Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals
Portfolio File Import
Quickly import all of your third-party portfolios from your local drive in csv format
Technical Analysis
Check basic technical indicators and analysis based on most latest market data
FinTech Suite
Use AI to screen and filter profitable investment opportunities
Bollinger Bands
Use Bollinger Bands indicator to analyze target price for a given investing horizon