Correlation Between Wells Fargo and Barings Emerging
Can any of the company-specific risk be diversified away by investing in both Wells Fargo and Barings 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 Barings Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wells Fargo Small and Barings Emerging Markets, you can compare the effects of market volatilities on Wells Fargo and Barings 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 Barings Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wells Fargo and Barings Emerging.
Diversification Opportunities for Wells Fargo and Barings Emerging
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Wells and Barings is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Wells Fargo Small and Barings Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barings Emerging Markets 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 Small are associated (or correlated) with Barings Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barings Emerging Markets has no effect on the direction of Wells Fargo i.e., Wells Fargo and Barings Emerging go up and down completely randomly.
Pair Corralation between Wells Fargo and Barings Emerging
Assuming the 90 days horizon Wells Fargo Small is expected to generate 3.91 times more return on investment than Barings Emerging. However, Wells Fargo is 3.91 times more volatile than Barings Emerging Markets. It trades about 0.1 of its potential returns per unit of risk. Barings Emerging Markets is currently generating about 0.12 per unit of risk. If you would invest 3,707 in Wells Fargo Small on September 13, 2024 and sell it today you would earn a total of 583.00 from holding Wells Fargo Small or generate 15.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wells Fargo Small vs. Barings Emerging Markets
Performance |
| Timeline |
| Wells Fargo Small |
| Barings Emerging Markets |
Wells Fargo and Barings Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wells Fargo and Barings Emerging
The main advantage of trading using opposite Wells Fargo and Barings Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wells Fargo position performs unexpectedly, Barings 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 Barings Emerging will offset losses from the drop in Barings Emerging's long position.| Wells Fargo vs. Loomis Sayles Inflation | Wells Fargo vs. American Funds Inflation | Wells Fargo vs. Short Duration Inflation | Wells Fargo vs. Arrow Managed Futures |
| Barings Emerging vs. Barings Active Short | Barings Emerging vs. Barings Emerging Markets | Barings Emerging vs. Barings Active Short | Barings Emerging vs. Barings Global Floating |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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