Correlation Between Equitable Holdings and Wells Fargo
Can any of the company-specific risk be diversified away by investing in both Equitable Holdings 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 Equitable Holdings and Wells Fargo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Equitable Holdings and Wells Fargo, you can compare the effects of market volatilities on Equitable Holdings 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 Equitable Holdings with a short position of Wells Fargo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Equitable Holdings and Wells Fargo.
Diversification Opportunities for Equitable Holdings and Wells Fargo
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Equitable and Wells is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Equitable Holdings and Wells Fargo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wells Fargo and Equitable Holdings 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 Equitable Holdings 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 has no effect on the direction of Equitable Holdings i.e., Equitable Holdings and Wells Fargo go up and down completely randomly.
Pair Corralation between Equitable Holdings and Wells Fargo
Assuming the 90 days trading horizon Equitable Holdings is expected to generate 1.28 times more return on investment than Wells Fargo. However, Equitable Holdings is 1.28 times more volatile than Wells Fargo. It trades about 0.04 of its potential returns per unit of risk. Wells Fargo is currently generating about 0.04 per unit of risk. If you would invest 1,820 in Equitable Holdings on August 27, 2024 and sell it today you would earn a total of 409.00 from holding Equitable Holdings or generate 22.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Equitable Holdings vs. Wells Fargo
Performance |
| Timeline |
| Equitable Holdings |
| Wells Fargo |
Equitable Holdings and Wells Fargo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Equitable Holdings and Wells Fargo
The main advantage of trading using opposite Equitable Holdings and Wells Fargo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Equitable Holdings 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.| Equitable Holdings vs. Capital One Financial | Equitable Holdings vs. Citizens Financial Group | Equitable Holdings vs. Equitable Holdings | Equitable Holdings vs. MetLife Preferred Stock |
| Wells Fargo vs. Bank of America | Wells Fargo vs. Bank of America | Wells Fargo vs. China Construction Bank | Wells Fargo vs. Bank of America |
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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