Correlation Between Wells Fargo and Grant Park
Can any of the company-specific risk be diversified away by investing in both Wells Fargo and Grant Park 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 Grant Park 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 Grant Park Multi, you can compare the effects of market volatilities on Wells Fargo and Grant Park 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 Grant Park. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wells Fargo and Grant Park.
Diversification Opportunities for Wells Fargo and Grant Park
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Wells and Grant is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Wells Fargo Ultra and Grant Park Multi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grant Park Multi 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 Grant Park. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grant Park Multi has no effect on the direction of Wells Fargo i.e., Wells Fargo and Grant Park go up and down completely randomly.
Pair Corralation between Wells Fargo and Grant Park
Assuming the 90 days horizon Wells Fargo is expected to generate 2.88 times less return on investment than Grant Park. But when comparing it to its historical volatility, Wells Fargo Ultra is 2.37 times less risky than Grant Park. It trades about 0.2 of its potential returns per unit of risk. Grant Park Multi is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 1,065 in Grant Park Multi on September 12, 2024 and sell it today you would earn a total of 14.00 from holding Grant Park Multi or generate 1.31% 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. Grant Park Multi
Performance |
| Timeline |
| Wells Fargo Ultra |
| Grant Park Multi |
Wells Fargo and Grant Park Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wells Fargo and Grant Park
The main advantage of trading using opposite Wells Fargo and Grant Park positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wells Fargo position performs unexpectedly, Grant Park 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 Grant Park will offset losses from the drop in Grant Park's long position.| Wells Fargo vs. Fidelity Capital Income | Wells Fargo vs. Artisan High Income | Wells Fargo vs. Prudential High Yield | Wells Fargo vs. Virtus High Yield |
| Grant Park vs. Pimco Trends Managed | Grant Park vs. Pimco Trends Managed | Grant Park vs. SCOR PK | Grant Park vs. Morningstar Unconstrained Allocation |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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