Correlation Between Wells Fargo and Barings Active
Can any of the company-specific risk be diversified away by investing in both Wells Fargo and Barings Active 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 Active 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 Barings Active Short, you can compare the effects of market volatilities on Wells Fargo and Barings Active 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 Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wells Fargo and Barings Active.
Diversification Opportunities for Wells Fargo and Barings Active
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Wells and Barings is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Wells Fargo Advantage and Barings Active Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barings Active Short 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 Barings Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barings Active Short has no effect on the direction of Wells Fargo i.e., Wells Fargo and Barings Active go up and down completely randomly.
Pair Corralation between Wells Fargo and Barings Active
Assuming the 90 days horizon Wells Fargo Advantage is expected to generate 3.47 times more return on investment than Barings Active. However, Wells Fargo is 3.47 times more volatile than Barings Active Short. It trades about 0.11 of its potential returns per unit of risk. Barings Active Short is currently generating about 0.24 per unit of risk. If you would invest 1,106 in Wells Fargo Advantage on September 1, 2024 and sell it today you would earn a total of 69.00 from holding Wells Fargo Advantage or generate 6.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wells Fargo Advantage vs. Barings Active Short
Performance |
| Timeline |
| Wells Fargo Advantage |
| Barings Active Short |
Wells Fargo and Barings Active Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wells Fargo and Barings Active
The main advantage of trading using opposite Wells Fargo and Barings Active positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wells Fargo position performs unexpectedly, Barings Active 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 Active will offset losses from the drop in Barings Active's long position.| Wells Fargo vs. Wells Fargo Advantage | Wells Fargo vs. Wells Fargo Advantage | Wells Fargo vs. Wells Fargo Advantage | Wells Fargo vs. Wells Fargo Ultra |
| Barings Active vs. Barings Active Short | Barings Active vs. Barings Emerging Markets | Barings Active vs. Barings Emerging Markets | Barings Active vs. Barings Global Floating |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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