Correlation Between Nasdaq 100 and Wells Fargo
Can any of the company-specific risk be diversified away by investing in both Nasdaq 100 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 Nasdaq 100 and Wells Fargo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nasdaq 100 2x Strategy and Wells Fargo Strategic, you can compare the effects of market volatilities on Nasdaq 100 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 Nasdaq 100 with a short position of Wells Fargo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq 100 and Wells Fargo.
Diversification Opportunities for Nasdaq 100 and Wells Fargo
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Nasdaq and Wells is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq 100 2x Strategy and Wells Fargo Strategic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wells Fargo Strategic and Nasdaq 100 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 Nasdaq 100 2x Strategy 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 Strategic has no effect on the direction of Nasdaq 100 i.e., Nasdaq 100 and Wells Fargo go up and down completely randomly.
Pair Corralation between Nasdaq 100 and Wells Fargo
Assuming the 90 days horizon Nasdaq 100 2x Strategy is expected to generate 8.83 times more return on investment than Wells Fargo. However, Nasdaq 100 is 8.83 times more volatile than Wells Fargo Strategic. It trades about 0.12 of its potential returns per unit of risk. Wells Fargo Strategic is currently generating about 0.11 per unit of risk. If you would invest 13,947 in Nasdaq 100 2x Strategy on September 13, 2024 and sell it today you would earn a total of 31,065 from holding Nasdaq 100 2x Strategy or generate 222.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nasdaq 100 2x Strategy vs. Wells Fargo Strategic
Performance |
| Timeline |
| Nasdaq 100 2x |
| Wells Fargo Strategic |
Nasdaq 100 and Wells Fargo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nasdaq 100 and Wells Fargo
The main advantage of trading using opposite Nasdaq 100 and Wells Fargo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq 100 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.| Nasdaq 100 vs. Lgm Risk Managed | Nasdaq 100 vs. Franklin High Income | Nasdaq 100 vs. Alliancebernstein Global High | Nasdaq 100 vs. Artisan High Income |
| Wells Fargo vs. Investec Emerging Markets | Wells Fargo vs. Nasdaq 100 2x Strategy | Wells Fargo vs. Siit Emerging Markets | Wells Fargo vs. Pnc Emerging Markets |
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.
Other Complementary Tools
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories |