Correlation Between Champlain Small and Wells Fargo
Can any of the company-specific risk be diversified away by investing in both Champlain Small 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 Champlain Small and Wells Fargo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Champlain Small and Wells Fargo Advantage, you can compare the effects of market volatilities on Champlain Small 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 Champlain Small with a short position of Wells Fargo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Champlain Small and Wells Fargo.
Diversification Opportunities for Champlain Small and Wells Fargo
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Champlain and Wells is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Champlain Small 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 Champlain Small 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 Champlain 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 Advantage has no effect on the direction of Champlain Small i.e., Champlain Small and Wells Fargo go up and down completely randomly.
Pair Corralation between Champlain Small and Wells Fargo
Assuming the 90 days horizon Champlain Small is expected to generate 1.08 times less return on investment than Wells Fargo. In addition to that, Champlain Small is 1.06 times more volatile than Wells Fargo Advantage. It trades about 0.31 of its total potential returns per unit of risk. Wells Fargo Advantage is currently generating about 0.36 per unit of volatility. If you would invest 1,727 in Wells Fargo Advantage on September 2, 2024 and sell it today you would earn a total of 197.00 from holding Wells Fargo Advantage or generate 11.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Champlain Small vs. Wells Fargo Advantage
Performance |
| Timeline |
| Champlain Small |
| Wells Fargo Advantage |
Champlain Small and Wells Fargo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Champlain Small and Wells Fargo
The main advantage of trading using opposite Champlain Small and Wells Fargo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Champlain Small 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.| Champlain Small vs. The Hartford Midcap | Champlain Small vs. Mfs Emerging Markets | Champlain Small vs. Wells Fargo Special | Champlain Small vs. Washington Mutual Investors |
| Wells Fargo vs. Wells Fargo Special | Wells Fargo vs. Champlain Small | Wells Fargo vs. Wells Fargo Emerging | Wells Fargo vs. The Hartford Midcap |
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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