Correlation Between Wells Fargo and Champlain Small
Can any of the company-specific risk be diversified away by investing in both Wells Fargo and Champlain Small 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 Champlain Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wells Fargo Advantage and Champlain Small, you can compare the effects of market volatilities on Wells Fargo and Champlain Small 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 Champlain Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wells Fargo and Champlain Small.
Diversification Opportunities for Wells Fargo and Champlain Small
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Wells and Champlain is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Wells Fargo Advantage and Champlain Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Champlain Small 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 Advantage are associated (or correlated) with Champlain Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Champlain Small has no effect on the direction of Wells Fargo i.e., Wells Fargo and Champlain Small go up and down completely randomly.
Pair Corralation between Wells Fargo and Champlain Small
Assuming the 90 days horizon Wells Fargo Advantage is expected to under-perform the Champlain Small. But the mutual fund apears to be less risky and, when comparing its historical volatility, Wells Fargo Advantage is 7.86 times less risky than Champlain Small. The mutual fund trades about -0.03 of its potential returns per unit of risk. The Champlain Small is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 2,310 in Champlain Small on August 30, 2024 and sell it today you would earn a total of 240.00 from holding Champlain Small or generate 10.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wells Fargo Advantage vs. Champlain Small
Performance |
| Timeline |
| Wells Fargo Advantage |
| Champlain Small |
Wells Fargo and Champlain Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wells Fargo and Champlain Small
The main advantage of trading using opposite Wells Fargo and Champlain Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wells Fargo position performs unexpectedly, Champlain Small 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 Champlain Small will offset losses from the drop in Champlain Small's long position.| Wells Fargo vs. Dimensional Retirement Income | Wells Fargo vs. Moderately Aggressive Balanced | Wells Fargo vs. Saat Moderate Strategy | Wells Fargo vs. Transamerica Cleartrack Retirement |
| Champlain Small vs. Putnam Equity Income | Champlain Small vs. Putnam Growth Opportunities | Champlain Small vs. HUMANA INC | Champlain Small vs. Aquagold International |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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