Correlation Between Wells Fargo and Europac Gold
Can any of the company-specific risk be diversified away by investing in both Wells Fargo and Europac Gold 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 Wells Fargo and Europac Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wells Fargo Advantage and Europac Gold Fund, you can compare the effects of market volatilities on Wells Fargo and Europac Gold 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 Wells Fargo with a short position of Europac Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wells Fargo and Europac Gold.
Diversification Opportunities for Wells Fargo and Europac Gold
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Wells and Europac is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Wells Fargo Advantage and Europac Gold Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Europac Gold and Wells Fargo 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 Wells Fargo Advantage are associated (or correlated) with Europac Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Europac Gold has no effect on the direction of Wells Fargo i.e., Wells Fargo and Europac Gold go up and down completely randomly.
Pair Corralation between Wells Fargo and Europac Gold
Assuming the 90 days horizon Wells Fargo Advantage is expected to generate 0.97 times more return on investment than Europac Gold. However, Wells Fargo Advantage is 1.03 times less risky than Europac Gold. It trades about 0.08 of its potential returns per unit of risk. Europac Gold Fund is currently generating about 0.03 per unit of risk. If you would invest 4,635 in Wells Fargo Advantage on November 28, 2024 and sell it today you would earn a total of 1,144 from holding Wells Fargo Advantage or generate 24.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wells Fargo Advantage vs. Europac Gold Fund
Performance |
| Timeline |
| Wells Fargo Advantage |
| Europac Gold |
Wells Fargo and Europac Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wells Fargo and Europac Gold
The main advantage of trading using opposite Wells Fargo and Europac Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wells Fargo position performs unexpectedly, Europac Gold 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 Europac Gold will offset losses from the drop in Europac Gold's long position.| Wells Fargo vs. Vanguard Growth Index | Wells Fargo vs. T Rowe Price | Wells Fargo vs. Tfa Alphagen Growth | Wells Fargo vs. Gmo Quality Fund |
| Europac Gold vs. Europac International Value | Europac Gold vs. Europac International Dividend | Europac Gold vs. Ep Emerging Markets | Europac Gold vs. Europac International Bond |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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