Correlation Between Wells Fargo and Inflation-protected
Can any of the company-specific risk be diversified away by investing in both Wells Fargo and Inflation-protected 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 Inflation-protected 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 Inflation Protected Bond Fund, you can compare the effects of market volatilities on Wells Fargo and Inflation-protected 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 Inflation-protected. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wells Fargo and Inflation-protected.
Diversification Opportunities for Wells Fargo and Inflation-protected
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Wells and Inflation-protected is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Wells Fargo Emerging and Inflation Protected Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inflation Protected 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 Inflation-protected. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inflation Protected has no effect on the direction of Wells Fargo i.e., Wells Fargo and Inflation-protected go up and down completely randomly.
Pair Corralation between Wells Fargo and Inflation-protected
Assuming the 90 days horizon Wells Fargo Emerging is expected to under-perform the Inflation-protected. In addition to that, Wells Fargo is 2.01 times more volatile than Inflation Protected Bond Fund. It trades about -0.18 of its total potential returns per unit of risk. Inflation Protected Bond Fund is currently generating about 0.45 per unit of volatility. If you would invest 1,000.00 in Inflation Protected Bond Fund on September 4, 2024 and sell it today you would earn a total of 34.00 from holding Inflation Protected Bond Fund or generate 3.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Wells Fargo Emerging vs. Inflation Protected Bond Fund
Performance |
| Timeline |
| Wells Fargo Emerging |
| Inflation Protected |
Wells Fargo and Inflation-protected Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wells Fargo and Inflation-protected
The main advantage of trading using opposite Wells Fargo and Inflation-protected positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wells Fargo position performs unexpectedly, Inflation-protected 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 Inflation-protected will offset losses from the drop in Inflation-protected's long position.| Wells Fargo vs. Wells Fargo Advantage | Wells Fargo vs. Wells Fargo Advantage | Wells Fargo vs. Wells Fargo Advantage | Wells Fargo vs. Wells Fargo Ultra |
| Inflation-protected vs. Wells Fargo Advantage | Inflation-protected vs. Wells Fargo Ultra | Inflation-protected vs. Wells Fargo Ultra | Inflation-protected vs. Wells Fargo Emerging |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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