Correlation Between Wells Fargo and Great West
Can any of the company-specific risk be diversified away by investing in both Wells Fargo and Great West 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 Great West into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wells Fargo Core and Great West Goldman Sachs, you can compare the effects of market volatilities on Wells Fargo and Great West 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 Great West. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wells Fargo and Great West.
Diversification Opportunities for Wells Fargo and Great West
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Wells and Great is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Wells Fargo Core and Great West Goldman Sachs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great West Goldman 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 Core are associated (or correlated) with Great West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great West Goldman has no effect on the direction of Wells Fargo i.e., Wells Fargo and Great West go up and down completely randomly.
Pair Corralation between Wells Fargo and Great West
Assuming the 90 days horizon Wells Fargo is expected to generate 1.49 times less return on investment than Great West. But when comparing it to its historical volatility, Wells Fargo Core is 2.92 times less risky than Great West. It trades about 0.09 of its potential returns per unit of risk. Great West Goldman Sachs is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 997.00 in Great West Goldman Sachs on September 13, 2024 and sell it today you would earn a total of 6.00 from holding Great West Goldman Sachs or generate 0.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Wells Fargo Core vs. Great West Goldman Sachs
Performance |
| Timeline |
| Wells Fargo Core |
| Great West Goldman |
Wells Fargo and Great West Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wells Fargo and Great West
The main advantage of trading using opposite Wells Fargo and Great West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wells Fargo position performs unexpectedly, Great West 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 Great West will offset losses from the drop in Great West's long position.| Wells Fargo vs. Wells Fargo Strategic | Wells Fargo vs. Wells Fargo Emerging | Wells Fargo vs. Wells Fargo Alternative | Wells Fargo vs. Wells Fargo Alternative |
| Great West vs. Dana Large Cap | Great West vs. Large Cap Growth Profund | Great West vs. Lord Abbett Affiliated | Great West vs. Pace Large Value |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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