Correlation Between Wells Fargo and Emerging Markets
Can any of the company-specific risk be diversified away by investing in both Wells Fargo and Emerging Markets 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 Emerging Markets into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wells Fargo Emerging and Emerging Markets Fund, you can compare the effects of market volatilities on Wells Fargo and Emerging Markets 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 Emerging Markets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wells Fargo and Emerging Markets.
Diversification Opportunities for Wells Fargo and Emerging Markets
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Wells and Emerging is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Wells Fargo Emerging and Emerging Markets Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerging Markets 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 Emerging are associated (or correlated) with Emerging Markets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerging Markets has no effect on the direction of Wells Fargo i.e., Wells Fargo and Emerging Markets go up and down completely randomly.
Pair Corralation between Wells Fargo and Emerging Markets
Assuming the 90 days horizon Wells Fargo Emerging is expected to under-perform the Emerging Markets. In addition to that, Wells Fargo is 1.01 times more volatile than Emerging Markets Fund. It trades about -0.25 of its total potential returns per unit of risk. Emerging Markets Fund is currently generating about -0.22 per unit of volatility. If you would invest 1,239 in Emerging Markets Fund on August 29, 2024 and sell it today you would lose (45.00) from holding Emerging Markets Fund or give up 3.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wells Fargo Emerging vs. Emerging Markets Fund
Performance |
| Timeline |
| Wells Fargo Emerging |
| Emerging Markets |
Wells Fargo and Emerging Markets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wells Fargo and Emerging Markets
The main advantage of trading using opposite Wells Fargo and Emerging Markets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wells Fargo position performs unexpectedly, Emerging Markets 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 Emerging Markets will offset losses from the drop in Emerging Markets' long position.| Wells Fargo vs. Mfs International Value | Wells Fargo vs. Oppenheimer International Growth | Wells Fargo vs. Deutsche Global Real | Wells Fargo vs. Columbia Select Large |
| Emerging Markets vs. Royce Global Financial | Emerging Markets vs. John Hancock Financial | Emerging Markets vs. Goldman Sachs Trust | Emerging Markets vs. Davis Financial Fund |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
Other Complementary Tools
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges |