Correlation Between Elfun Diversified and Wells Fargo
Can any of the company-specific risk be diversified away by investing in both Elfun Diversified 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 Elfun Diversified and Wells Fargo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Elfun Diversified Fund and Wells Fargo Short, you can compare the effects of market volatilities on Elfun Diversified 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 Elfun Diversified with a short position of Wells Fargo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elfun Diversified and Wells Fargo.
Diversification Opportunities for Elfun Diversified and Wells Fargo
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Elfun and Wells is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Elfun Diversified Fund and Wells Fargo Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wells Fargo Short and Elfun Diversified 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 Elfun Diversified Fund 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 Short has no effect on the direction of Elfun Diversified i.e., Elfun Diversified and Wells Fargo go up and down completely randomly.
Pair Corralation between Elfun Diversified and Wells Fargo
Assuming the 90 days horizon Elfun Diversified Fund is expected to generate 3.03 times more return on investment than Wells Fargo. However, Elfun Diversified is 3.03 times more volatile than Wells Fargo Short. It trades about 0.05 of its potential returns per unit of risk. Wells Fargo Short is currently generating about 0.06 per unit of risk. If you would invest 2,190 in Elfun Diversified Fund on September 13, 2024 and sell it today you would earn a total of 18.00 from holding Elfun Diversified Fund or generate 0.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Elfun Diversified Fund vs. Wells Fargo Short
Performance |
| Timeline |
| Elfun Diversified |
| Wells Fargo Short |
Elfun Diversified and Wells Fargo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elfun Diversified and Wells Fargo
The main advantage of trading using opposite Elfun Diversified and Wells Fargo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elfun Diversified 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.| Elfun Diversified vs. State Street Target | Elfun Diversified vs. State Street Target | Elfun Diversified vs. Ssga International Stock | Elfun Diversified vs. State Street Target |
| Wells Fargo vs. Wells Fargo Advantage | Wells Fargo vs. Wells Fargo Advantage | Wells Fargo vs. Wells Fargo Advantage | Wells Fargo vs. Wells Fargo Ultra |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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