Correlation Between Fundvantage Trust and Wells Fargo

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Can any of the company-specific risk be diversified away by investing in both Fundvantage Trust 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 Fundvantage Trust and Wells Fargo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fundvantage Trust and Wells Fargo Large, you can compare the effects of market volatilities on Fundvantage Trust 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 Fundvantage Trust with a short position of Wells Fargo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fundvantage Trust and Wells Fargo.

Diversification Opportunities for Fundvantage Trust and Wells Fargo

-0.32
  Correlation Coefficient

Very good diversification

The 3 months correlation between Fundvantage and Wells is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Fundvantage Trust and Wells Fargo Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wells Fargo Large and Fundvantage Trust 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 Fundvantage Trust 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 Large has no effect on the direction of Fundvantage Trust i.e., Fundvantage Trust and Wells Fargo go up and down completely randomly.

Pair Corralation between Fundvantage Trust and Wells Fargo

Assuming the 90 days horizon Fundvantage Trust is expected to generate 1.86 times less return on investment than Wells Fargo. But when comparing it to its historical volatility, Fundvantage Trust is 4.63 times less risky than Wells Fargo. It trades about 0.24 of its potential returns per unit of risk. Wells Fargo Large is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  695.00  in Wells Fargo Large on August 30, 2024 and sell it today you would earn a total of  11.00  from holding Wells Fargo Large or generate 1.58% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Fundvantage Trust   vs.  Wells Fargo Large

 Performance 
       Timeline  
Fundvantage Trust 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Fundvantage Trust are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Fundvantage Trust is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Wells Fargo Large 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Wells Fargo Large has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Wells Fargo is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Fundvantage Trust and Wells Fargo Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Fundvantage Trust and Wells Fargo

The main advantage of trading using opposite Fundvantage Trust and Wells Fargo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fundvantage Trust 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.
The idea behind Fundvantage Trust and Wells Fargo Large pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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