Correlation Between Legg Mason and Wells Fargo
Can any of the company-specific risk be diversified away by investing in both Legg Mason 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 Legg Mason and Wells Fargo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Legg Mason Partners and Wells Fargo Enterprise, you can compare the effects of market volatilities on Legg Mason 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 Legg Mason with a short position of Wells Fargo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Wells Fargo.
Diversification Opportunities for Legg Mason and Wells Fargo
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Legg and Wells is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Partners and Wells Fargo Enterprise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wells Fargo Enterprise and Legg Mason 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 Legg Mason Partners 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 Enterprise has no effect on the direction of Legg Mason i.e., Legg Mason and Wells Fargo go up and down completely randomly.
Pair Corralation between Legg Mason and Wells Fargo
If you would invest 6,328 in Wells Fargo Enterprise on August 30, 2024 and sell it today you would earn a total of 509.00 from holding Wells Fargo Enterprise or generate 8.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Legg Mason Partners vs. Wells Fargo Enterprise
Performance |
| Timeline |
| Legg Mason Partners |
| Wells Fargo Enterprise |
Legg Mason and Wells Fargo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Wells Fargo
The main advantage of trading using opposite Legg Mason and Wells Fargo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason 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.| Legg Mason vs. Dreyfusstandish Global Fixed | Legg Mason vs. Vanguard High Yield Tax Exempt | Legg Mason vs. Ms Global Fixed | Legg Mason vs. Calamos Dynamic Convertible |
| Wells Fargo vs. Dreyfusstandish Global Fixed | Wells Fargo vs. Artisan Select Equity | Wells Fargo vs. Rbc Global Equity | Wells Fargo vs. Cutler Equity |
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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