Correlation Between Wells Fargo and Eaton Vance
Can any of the company-specific risk be diversified away by investing in both Wells Fargo and Eaton Vance 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 Eaton Vance 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 Eaton Vance Large Cap, you can compare the effects of market volatilities on Wells Fargo and Eaton Vance 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 Eaton Vance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wells Fargo and Eaton Vance.
Diversification Opportunities for Wells Fargo and Eaton Vance
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Wells and Eaton is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Wells Fargo Advantage and Eaton Vance Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eaton Vance Large 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 Eaton Vance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eaton Vance Large has no effect on the direction of Wells Fargo i.e., Wells Fargo and Eaton Vance go up and down completely randomly.
Pair Corralation between Wells Fargo and Eaton Vance
Assuming the 90 days horizon Wells Fargo Advantage is expected to generate 2.21 times more return on investment than Eaton Vance. However, Wells Fargo is 2.21 times more volatile than Eaton Vance Large Cap. It trades about 0.05 of its potential returns per unit of risk. Eaton Vance Large Cap is currently generating about 0.04 per unit of risk. If you would invest 4,247 in Wells Fargo Advantage on August 24, 2024 and sell it today you would earn a total of 2,043 from holding Wells Fargo Advantage or generate 48.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wells Fargo Advantage vs. Eaton Vance Large Cap
Performance |
| Timeline |
| Wells Fargo Advantage |
| Eaton Vance Large |
Wells Fargo and Eaton Vance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wells Fargo and Eaton Vance
The main advantage of trading using opposite Wells Fargo and Eaton Vance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wells Fargo position performs unexpectedly, Eaton Vance 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 Eaton Vance will offset losses from the drop in Eaton Vance's long position.| Wells Fargo vs. First Eagle Gold | Wells Fargo vs. First Eagle Gold | Wells Fargo vs. First Eagle Gold | Wells Fargo vs. Gold Portfolio Fidelity |
| Eaton Vance vs. Invesco Gold Special | Eaton Vance vs. Short Precious Metals | Eaton Vance vs. Gabelli Gold Fund | Eaton Vance vs. Wells Fargo Advantage |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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