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 Special, 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
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Champlain and Wells is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Champlain Small and Wells Fargo Special in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wells Fargo Special 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 Special 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 1.84 times more return on investment than Wells Fargo. However, Champlain Small is 1.84 times more volatile than Wells Fargo Special. It trades about 0.33 of its potential returns per unit of risk. Wells Fargo Special is currently generating about 0.14 per unit of risk. If you would invest 2,278 in Champlain Small on August 26, 2024 and sell it today you would earn a total of 268.00 from holding Champlain Small or generate 11.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Champlain Small vs. Wells Fargo Special
Performance |
| Timeline |
| Champlain Small |
| Wells Fargo Special |
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. Washington Mutual Investors | Champlain Small vs. Baron Emerging Markets | Champlain Small vs. Aquagold International | Champlain Small vs. Morningstar Unconstrained Allocation |
| Wells Fargo vs. Wells Fargo Emerging | Wells Fargo vs. The Hartford Midcap | Wells Fargo vs. Mfs Value Fund | Wells Fargo vs. Mfs Mid Cap |
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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