Correlation Between Harmony Gold and Wells Fargo
Can any of the company-specific risk be diversified away by investing in both Harmony Gold 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 Harmony Gold and Wells Fargo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Harmony Gold Mining and Wells Fargo, you can compare the effects of market volatilities on Harmony Gold 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 Harmony Gold with a short position of Wells Fargo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harmony Gold and Wells Fargo.
Diversification Opportunities for Harmony Gold and Wells Fargo
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Harmony and Wells is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and Wells Fargo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wells Fargo and Harmony Gold 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 Harmony Gold Mining 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 Harmony Gold i.e., Harmony Gold and Wells Fargo go up and down completely randomly.
Pair Corralation between Harmony Gold and Wells Fargo
Assuming the 90 days trading horizon Harmony Gold Mining is expected to generate 0.9 times more return on investment than Wells Fargo. However, Harmony Gold Mining is 1.11 times less risky than Wells Fargo. It trades about 0.49 of its potential returns per unit of risk. Wells Fargo is currently generating about 0.32 per unit of risk. If you would invest 988,000 in Harmony Gold Mining on October 23, 2024 and sell it today you would earn a total of 172,000 from holding Harmony Gold Mining or generate 17.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Harmony Gold Mining vs. Wells Fargo
Performance |
| Timeline |
| Harmony Gold Mining |
| Wells Fargo |
Harmony Gold and Wells Fargo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Harmony Gold and Wells Fargo
The main advantage of trading using opposite Harmony Gold and Wells Fargo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harmony Gold 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.| Harmony Gold vs. Agrometal SAI | Harmony Gold vs. Pfizer Inc | Harmony Gold vs. Instituto Rosenbusch SA | Harmony Gold vs. Sociedad Comercial del |
| Wells Fargo vs. Transportadora de Gas | Wells Fargo vs. Telecom Argentina | Wells Fargo vs. United States Steel | Wells Fargo vs. Harmony Gold Mining |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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