Correlation Between Federated Total and Wells Fargo
Can any of the company-specific risk be diversified away by investing in both Federated Total 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 Federated Total and Wells Fargo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Total Return and Wells Fargo Emerging, you can compare the effects of market volatilities on Federated Total 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 Federated Total with a short position of Wells Fargo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Total and Wells Fargo.
Diversification Opportunities for Federated Total and Wells Fargo
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Federated and Wells is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Federated Total Return and Wells Fargo Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wells Fargo Emerging and Federated Total 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 Federated Total Return 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 Emerging has no effect on the direction of Federated Total i.e., Federated Total and Wells Fargo go up and down completely randomly.
Pair Corralation between Federated Total and Wells Fargo
Assuming the 90 days horizon Federated Total is expected to generate 3.0 times less return on investment than Wells Fargo. But when comparing it to its historical volatility, Federated Total Return is 2.16 times less risky than Wells Fargo. It trades about 0.03 of its potential returns per unit of risk. Wells Fargo Emerging is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,237 in Wells Fargo Emerging on August 26, 2024 and sell it today you would earn a total of 335.00 from holding Wells Fargo Emerging or generate 14.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Total Return vs. Wells Fargo Emerging
Performance |
| Timeline |
| Federated Total Return |
| Wells Fargo Emerging |
Federated Total and Wells Fargo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Total and Wells Fargo
The main advantage of trading using opposite Federated Total and Wells Fargo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Total 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.| Federated Total vs. Federated Emerging Market | Federated Total vs. Federated Mdt All | Federated Total vs. Federated Mdt Balanced | Federated Total vs. Federated Global Allocation |
| Wells Fargo vs. Mfs International Value | Wells Fargo vs. Oppenheimer International Growth | Wells Fargo vs. Deutsche Global Real | Wells Fargo vs. Columbia Select Large |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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