Correlation Between Heartland Value and Wells Fargo
Can any of the company-specific risk be diversified away by investing in both Heartland Value 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 Heartland Value and Wells Fargo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Heartland Value Plus and Wells Fargo Opportunity, you can compare the effects of market volatilities on Heartland Value 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 Heartland Value with a short position of Wells Fargo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heartland Value and Wells Fargo.
Diversification Opportunities for Heartland Value and Wells Fargo
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between HEARTLAND and Wells is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Heartland Value Plus and Wells Fargo Opportunity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wells Fargo Opportunity and Heartland Value 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 Heartland Value Plus 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 Opportunity has no effect on the direction of Heartland Value i.e., Heartland Value and Wells Fargo go up and down completely randomly.
Pair Corralation between Heartland Value and Wells Fargo
Assuming the 90 days horizon Heartland Value Plus is expected to generate 1.41 times more return on investment than Wells Fargo. However, Heartland Value is 1.41 times more volatile than Wells Fargo Opportunity. It trades about -0.19 of its potential returns per unit of risk. Wells Fargo Opportunity is currently generating about -0.32 per unit of risk. If you would invest 3,610 in Heartland Value Plus on December 4, 2024 and sell it today you would lose (153.00) from holding Heartland Value Plus or give up 4.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Heartland Value Plus vs. Wells Fargo Opportunity
Performance |
| Timeline |
| Heartland Value Plus |
| Wells Fargo Opportunity |
Heartland Value and Wells Fargo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Heartland Value and Wells Fargo
The main advantage of trading using opposite Heartland Value and Wells Fargo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Heartland Value 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.| Heartland Value vs. Heartland Value Fund | Heartland Value vs. Large Cap Fund | Heartland Value vs. Amg Yacktman Fund | Heartland Value vs. Wasatch Large Cap |
| Wells Fargo vs. Ab Bond Inflation | Wells Fargo vs. Schwab Treasury Inflation | Wells Fargo vs. Short Duration Inflation | Wells Fargo vs. Ab Bond Inflation |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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