Correlation Between Wells Fargo and Federated Emerging
Can any of the company-specific risk be diversified away by investing in both Wells Fargo and Federated Emerging 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 Federated Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wells Fargo Mon and Federated Emerging Market, you can compare the effects of market volatilities on Wells Fargo and Federated Emerging 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 Federated Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wells Fargo and Federated Emerging.
Diversification Opportunities for Wells Fargo and Federated Emerging
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Wells and Federated is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Wells Fargo Mon and Federated Emerging Market in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Emerging Market 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 Mon are associated (or correlated) with Federated Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Emerging Market has no effect on the direction of Wells Fargo i.e., Wells Fargo and Federated Emerging go up and down completely randomly.
Pair Corralation between Wells Fargo and Federated Emerging
Assuming the 90 days horizon Wells Fargo Mon is expected to generate 3.69 times more return on investment than Federated Emerging. However, Wells Fargo is 3.69 times more volatile than Federated Emerging Market. It trades about 0.34 of its potential returns per unit of risk. Federated Emerging Market is currently generating about 0.13 per unit of risk. If you would invest 1,948 in Wells Fargo Mon on September 1, 2024 and sell it today you would earn a total of 174.00 from holding Wells Fargo Mon or generate 8.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wells Fargo Mon vs. Federated Emerging Market
Performance |
| Timeline |
| Wells Fargo Mon |
| Federated Emerging Market |
Wells Fargo and Federated Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wells Fargo and Federated Emerging
The main advantage of trading using opposite Wells Fargo and Federated Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wells Fargo position performs unexpectedly, Federated Emerging 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 Federated Emerging will offset losses from the drop in Federated Emerging's long position.| Wells Fargo vs. Wells Fargo Advantage | Wells Fargo vs. Wells Fargo Advantage | Wells Fargo vs. Wells Fargo Advantage | Wells Fargo vs. Wells Fargo Ultra |
| Federated Emerging vs. Fidelity Advisor Financial | Federated Emerging vs. 1919 Financial Services | Federated Emerging vs. Mesirow Financial Small | Federated Emerging vs. John Hancock Financial |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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