Correlation Between Glg Intl and Wells Fargo
Can any of the company-specific risk be diversified away by investing in both Glg Intl 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 Glg Intl and Wells Fargo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Glg Intl Small and Wells Fargo Real, you can compare the effects of market volatilities on Glg Intl 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 Glg Intl with a short position of Wells Fargo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Glg Intl and Wells Fargo.
Diversification Opportunities for Glg Intl and Wells Fargo
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Glg and Wells is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Glg Intl Small and Wells Fargo Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wells Fargo Real and Glg Intl 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 Glg Intl Small 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 Real has no effect on the direction of Glg Intl i.e., Glg Intl and Wells Fargo go up and down completely randomly.
Pair Corralation between Glg Intl and Wells Fargo
Assuming the 90 days horizon Glg Intl Small is expected to generate 2.24 times more return on investment than Wells Fargo. However, Glg Intl is 2.24 times more volatile than Wells Fargo Real. It trades about 0.09 of its potential returns per unit of risk. Wells Fargo Real is currently generating about 0.1 per unit of risk. If you would invest 6,968 in Glg Intl Small on September 14, 2024 and sell it today you would earn a total of 1,779 from holding Glg Intl Small or generate 25.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.6% |
| Values | Daily Returns |
Glg Intl Small vs. Wells Fargo Real
Performance |
| Timeline |
| Glg Intl Small |
| Wells Fargo Real |
Glg Intl and Wells Fargo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Glg Intl and Wells Fargo
The main advantage of trading using opposite Glg Intl and Wells Fargo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Glg Intl 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.| Glg Intl vs. Artisan Emerging Markets | Glg Intl vs. Ep Emerging Markets | Glg Intl vs. Aqr Long Short Equity | Glg Intl vs. Siit Emerging Markets |
| Wells Fargo vs. Gmo Global Equity | Wells Fargo vs. Artisan Select Equity | Wells Fargo vs. Balanced Fund Retail | Wells Fargo vs. Ab Fixed Income Shares |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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