Correlation Between Calvert High and Wells Fargo
Can any of the company-specific risk be diversified away by investing in both Calvert High 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 Calvert High and Wells Fargo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Calvert High Yield and Wells Fargo Advantage, you can compare the effects of market volatilities on Calvert High 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 Calvert High with a short position of Wells Fargo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Calvert High and Wells Fargo.
Diversification Opportunities for Calvert High and Wells Fargo
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Calvert and Wells is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Calvert High Yield 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 Calvert High 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 Calvert High Yield 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 Calvert High i.e., Calvert High and Wells Fargo go up and down completely randomly.
Pair Corralation between Calvert High and Wells Fargo
Assuming the 90 days horizon Calvert High is expected to generate 10.02 times less return on investment than Wells Fargo. But when comparing it to its historical volatility, Calvert High Yield is 9.63 times less risky than Wells Fargo. It trades about 0.15 of its potential returns per unit of risk. Wells Fargo Advantage is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 1,659 in Wells Fargo Advantage on September 12, 2024 and sell it today you would earn a total of 198.00 from holding Wells Fargo Advantage or generate 11.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Calvert High Yield vs. Wells Fargo Advantage
Performance |
| Timeline |
| Calvert High Yield |
| Wells Fargo Advantage |
Calvert High and Wells Fargo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Calvert High and Wells Fargo
The main advantage of trading using opposite Calvert High and Wells Fargo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Calvert High 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.| Calvert High vs. Fidelity Advisor Gold | Calvert High vs. Vy Goldman Sachs | Calvert High vs. Invesco Gold Special | Calvert High vs. Great West Goldman Sachs |
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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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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