Correlation Between Wells Fargo and Amg Managers
Can any of the company-specific risk be diversified away by investing in both Wells Fargo and Amg Managers 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 Amg Managers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wells Fargo Growth and Amg Managers Fairpointe, you can compare the effects of market volatilities on Wells Fargo and Amg Managers 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 Amg Managers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wells Fargo and Amg Managers.
Diversification Opportunities for Wells Fargo and Amg Managers
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Wells and Amg is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Wells Fargo Growth and Amg Managers Fairpointe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amg Managers Fairpointe 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 Growth are associated (or correlated) with Amg Managers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amg Managers Fairpointe has no effect on the direction of Wells Fargo i.e., Wells Fargo and Amg Managers go up and down completely randomly.
Pair Corralation between Wells Fargo and Amg Managers
Assuming the 90 days horizon Wells Fargo is expected to generate 1.0 times less return on investment than Amg Managers. In addition to that, Wells Fargo is 1.39 times more volatile than Amg Managers Fairpointe. It trades about 0.07 of its total potential returns per unit of risk. Amg Managers Fairpointe is currently generating about 0.1 per unit of volatility. If you would invest 1,897 in Amg Managers Fairpointe on September 12, 2024 and sell it today you would earn a total of 689.00 from holding Amg Managers Fairpointe or generate 36.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wells Fargo Growth vs. Amg Managers Fairpointe
Performance |
| Timeline |
| Wells Fargo Growth |
| Amg Managers Fairpointe |
Wells Fargo and Amg Managers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wells Fargo and Amg Managers
The main advantage of trading using opposite Wells Fargo and Amg Managers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wells Fargo position performs unexpectedly, Amg Managers 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 Amg Managers will offset losses from the drop in Amg Managers' long position.| Wells Fargo vs. Jpmorgan Mid Cap | Wells Fargo vs. Jpmorgan International Value | Wells Fargo vs. Jpmorgan Small Cap | Wells Fargo vs. Wells Fargo Discovery |
| Amg Managers vs. Schwab Treasury Money | Amg Managers vs. Cref Money Market | Amg Managers vs. Aig Government Money | Amg Managers vs. Money Market Obligations |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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