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 Short Term 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
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Wells and Barings is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Wells Fargo Short Term 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 Short Term 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 is expected to generate 1.08 times less return on investment than Barings Emerging. But when comparing it to its historical volatility, Wells Fargo Short Term is 2.6 times less risky than Barings Emerging. It trades about 0.15 of its potential returns per unit of risk. Barings Emerging Markets is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 673.00 in Barings Emerging Markets on August 26, 2024 and sell it today you would earn a total of 83.00 from holding Barings Emerging Markets or generate 12.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wells Fargo Short Term vs. Barings Emerging Markets
Performance |
| Timeline |
| Wells Fargo Short |
| 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. Origin Emerging Markets | Wells Fargo vs. Artisan Emerging Markets | Wells Fargo vs. Pnc Emerging Markets | Wells Fargo vs. Investec Emerging Markets |
| Barings Emerging vs. Jhancock Short Duration | Barings Emerging vs. Maryland Short Term Tax Free | Barings Emerging vs. Locorr Longshort Modities | Barings Emerging vs. Ab Select 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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