Correlation Between Talanx AG and Wells Fargo
Can any of the company-specific risk be diversified away by investing in both Talanx AG 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 Talanx AG and Wells Fargo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Talanx AG and West Fraser Timber, you can compare the effects of market volatilities on Talanx AG 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 Talanx AG with a short position of Wells Fargo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Talanx AG and Wells Fargo.
Diversification Opportunities for Talanx AG and Wells Fargo
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Talanx and Wells is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Talanx AG and West Fraser Timber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on West Fraser Timber and Talanx AG 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 Talanx AG 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 West Fraser Timber has no effect on the direction of Talanx AG i.e., Talanx AG and Wells Fargo go up and down completely randomly.
Pair Corralation between Talanx AG and Wells Fargo
Assuming the 90 days horizon Talanx AG is expected to generate 0.77 times more return on investment than Wells Fargo. However, Talanx AG is 1.29 times less risky than Wells Fargo. It trades about 0.1 of its potential returns per unit of risk. West Fraser Timber is currently generating about 0.03 per unit of risk. If you would invest 5,238 in Talanx AG on September 12, 2024 and sell it today you would earn a total of 3,162 from holding Talanx AG or generate 60.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Talanx AG vs. West Fraser Timber
Performance |
| Timeline |
| Talanx AG |
| West Fraser Timber |
Talanx AG and Wells Fargo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Talanx AG and Wells Fargo
The main advantage of trading using opposite Talanx AG and Wells Fargo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Talanx AG 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.| Talanx AG vs. Food Life Companies | Talanx AG vs. Tyson Foods | Talanx AG vs. Lery Seafood Group | Talanx AG vs. EEDUCATION ALBERT AB |
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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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