Correlation Between Aig Government and Wells Fargo
Can any of the company-specific risk be diversified away by investing in both Aig Government and Wells Fargo 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 Aig Government and Wells Fargo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aig Government Money and Wells Fargo Mon, you can compare the effects of market volatilities on Aig Government and Wells Fargo 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 Aig Government with a short position of Wells Fargo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aig Government and Wells Fargo.
Diversification Opportunities for Aig Government and Wells Fargo
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Aig and Wells is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Aig Government Money and Wells Fargo Mon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wells Fargo Mon and Aig Government 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 Aig Government Money are associated (or correlated) with Wells Fargo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wells Fargo Mon has no effect on the direction of Aig Government i.e., Aig Government and Wells Fargo go up and down completely randomly.
Pair Corralation between Aig Government and Wells Fargo
Assuming the 90 days horizon Aig Government is expected to generate 12.08 times less return on investment than Wells Fargo. But when comparing it to its historical volatility, Aig Government Money is 5.12 times less risky than Wells Fargo. It trades about 0.09 of its potential returns per unit of risk. Wells Fargo Mon is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 720.00 in Wells Fargo Mon on November 4, 2024 and sell it today you would earn a total of 26.00 from holding Wells Fargo Mon or generate 3.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aig Government Money vs. Wells Fargo Mon
Performance |
| Timeline |
| Aig Government Money |
| Wells Fargo Mon |
Aig Government and Wells Fargo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aig Government and Wells Fargo
The main advantage of trading using opposite Aig Government and Wells Fargo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aig Government position performs unexpectedly, Wells Fargo 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 Wells Fargo will offset losses from the drop in Wells Fargo's long position.| Aig Government vs. Federated Emerging Market | Aig Government vs. Angel Oak Multi Strategy | Aig Government vs. Siit Emerging Markets | Aig Government vs. Ashmore Emerging Markets |
| Wells Fargo vs. Cmg Ultra Short | Wells Fargo vs. Aqr Sustainable Long Short | Wells Fargo vs. Blackrock Short Obligations | Wells Fargo vs. Blackrock Global Longshort |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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