Correlation Between Wells Fargo and City National
Can any of the company-specific risk be diversified away by investing in both Wells Fargo and City National 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 City National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wells Fargo Ultra and City National Rochdale, you can compare the effects of market volatilities on Wells Fargo and City National 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 City National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wells Fargo and City National.
Diversification Opportunities for Wells Fargo and City National
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Wells and City is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Wells Fargo Ultra and City National Rochdale in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on City National Rochdale 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 Ultra are associated (or correlated) with City National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of City National Rochdale has no effect on the direction of Wells Fargo i.e., Wells Fargo and City National go up and down completely randomly.
Pair Corralation between Wells Fargo and City National
Assuming the 90 days horizon Wells Fargo Ultra is expected to generate 0.11 times more return on investment than City National. However, Wells Fargo Ultra is 9.29 times less risky than City National. It trades about 0.28 of its potential returns per unit of risk. City National Rochdale is currently generating about 0.02 per unit of risk. If you would invest 878.00 in Wells Fargo Ultra on October 23, 2024 and sell it today you would earn a total of 4.00 from holding Wells Fargo Ultra or generate 0.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wells Fargo Ultra vs. City National Rochdale
Performance |
| Timeline |
| Wells Fargo Ultra |
| City National Rochdale |
Wells Fargo and City National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wells Fargo and City National
The main advantage of trading using opposite Wells Fargo and City National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wells Fargo position performs unexpectedly, City National 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 City National will offset losses from the drop in City National's long position.| Wells Fargo vs. Tax Free Conservative Income | Wells Fargo vs. Madison Diversified Income | Wells Fargo vs. Jhancock Diversified Macro | Wells Fargo vs. Jhancock Diversified Macro |
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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