Correlation Between Wells Fargo and ING Groep
Can any of the company-specific risk be diversified away by investing in both Wells Fargo and ING Groep 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 Wells Fargo and ING Groep into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wells Fargo and ING Groep NV, you can compare the effects of market volatilities on Wells Fargo and ING Groep 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 Wells Fargo with a short position of ING Groep. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wells Fargo and ING Groep.
Diversification Opportunities for Wells Fargo and ING Groep
-0.94 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Wells and ING is -0.94. Overlapping area represents the amount of risk that can be diversified away by holding Wells Fargo and ING Groep NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ING Groep NV and Wells Fargo 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 Wells Fargo are associated (or correlated) with ING Groep. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ING Groep NV has no effect on the direction of Wells Fargo i.e., Wells Fargo and ING Groep go up and down completely randomly.
Pair Corralation between Wells Fargo and ING Groep
Assuming the 90 days trading horizon Wells Fargo is expected to generate 1.33 times more return on investment than ING Groep. However, Wells Fargo is 1.33 times more volatile than ING Groep NV. It trades about 0.07 of its potential returns per unit of risk. ING Groep NV is currently generating about 0.06 per unit of risk. If you would invest 4,024 in Wells Fargo on September 3, 2024 and sell it today you would earn a total of 3,281 from holding Wells Fargo or generate 81.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.64% |
| Values | Daily Returns |
Wells Fargo vs. ING Groep NV
Performance |
| Timeline |
| Wells Fargo |
| ING Groep NV |
Wells Fargo and ING Groep Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wells Fargo and ING Groep
The main advantage of trading using opposite Wells Fargo and ING Groep positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wells Fargo position performs unexpectedly, ING Groep 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 ING Groep will offset losses from the drop in ING Groep's long position.| Wells Fargo vs. JPMorgan Chase Co | Wells Fargo vs. HSBC Holdings plc | Wells Fargo vs. Citigroup | Wells Fargo vs. Mitsubishi UFJ Financial |
| ING Groep vs. GEAR4MUSIC LS 10 | ING Groep vs. Uber Technologies | ING Groep vs. GRIFFIN MINING LTD | ING Groep 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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